The wild card in the air freight game

Two weeks ago, when we analyzed the February results from some of the world’s big cargo carriers, we concluded that, once full worldwide data were available, we would see a fall-off in demand growth from January to February, and that the combined two-month growth would be below the double-digit percentages we saw last year, but still solid.

Well, both WorldACD and IATA have now published their worldwide summaries, and, yes, year-over-year growth was lower in February than in January, and, yes the combined two-month growth (which eliminates the impact of the timing of the Chinese New Year holiday) was about 7%.

WorldACD bases its demand-growth analysis on cargo volume (chargeable weight, in tonnes), and by this measure the company said demand increased 7.0% over the combined January/February period in 2017 – “a good start of the year by any standard.”

IATA bases its analysis on cargo traffic (revenue tonne kilometers flown), and concluded that the demand increase for the two-month period was 6.8%.

Either way, 2018 clearly got off to a strong start. But the real question is: Now what? And not just the usual “now what,” but the 2018 version of “now what” that includes a new wild card.

When we try to look into the future, we are usually concerned with things like inventory stockpiles, new iPhone releases, fluctuations in the purchasing managers’ index, trends in the relationships among world trade, GDP, and air freight demand…

And on that basis, things look pretty good. 2017 will present tough year-over-year comparisons, so we are not going to see the double-digit growth we saw then, but all the signs point to continued solid growth in demand.

But then there is the wild card. US President Donald Trump seems to have started down a path that could lead to an international trade war – first with China, then with the rest of the world. If he, and all others involved, can stop the march down that path and work to resolve perceived trade injustices through negotiation, then worldwide economic growth will continue to drive growth in demand for air freight.

If not… well it won’t just be the air freight industry that suffers.