Demand growth strengthens in April

When the world’s big cargo carriers, airports, and handlers began reporting their April results, it appeared that while year-over-year growth in demand for air freight would probably be a little higher than the 1.7% IATA reported for March, it would not be by much. But as results continued to come in from some of the late reporters, the picture began to change, and our sense was that while demand growth in April would not be anywhere near the almost-double-digit percentages we became accustomed to in 2017, it would be a little stronger than we first thought.

And so it has turned out, with IATA reporting total worldwide air cargo traffic up 4.1% y-o-y in April, and international traffic up 4.9%.

Of course, year-over-year percentages only tell part of the story, and it is important to look back further in time than just twelve months. Comparing 2017 to 2016, we see that growth spiked dramatically (up 14%) in March 2017, making for a very tough comparison. So the 1.7% y-o-y growth in March 2018 is less of a fall-off than it might at first seem. On the other hand, air freight demand was up 8.5% in April 2017 – very close to the full-year average but still above the long-term rate – so our expectation is that IATA’s reported 4.1% growth in April 2018 is probably a reasonable reflection of underlying trends.

Discussing those underlying trends, IATA said,  “we remain cautiously optimistic that demand will grow in the region of 4% this year. But the forecast appears to have increasing downside potential. Oil prices continue to rise as does protectionist rhetoric. Borders open to people and to trade drive economic growth and social prosperity. We are all disadvantaged when they are closed.”

Our view is very much in line with IATA’s. Absent political interference, demand for air freight will remain strong, and we would expect full-year growth of 4% to 5%.

With political interference? Who knows?