2014 ends on “positive note” — IATA

The International Air Transport Association released its air freight market analysis for December 2014, showing an overall 4.9% year-over-year increase in worldwide cargo traffic.

The growth was driven by a 5.1% increase in international traffic, while domestic traffic was up 3.8%.

The December numbers are very much in line with the full year, for which IATA reported an overall cargo traffic increase of 4.5%

As we reported earlier this week, December data gathered by Netherlands-based WorldACD show air freight demand for the month to be up 6.4% – a somewhat larger y-o-y increase than the 4.9% reported by IATA. Some of the difference may be the result of the fact that while IATA gathers reports of cargo traffic (in revenue tonne kilometers flown) from member airlines, WorldACD gathers cargo volume data (in tonnes) directly from the airwaybills of over fifty carriers. Given this difference in reporting, one should not place too much importance on the exactness of the match, and it is clear that 2014 saw solid, if unspectacular growth in air freight demand.

Summing up the year, IATA said: “After several years of stagnation, the air cargo business is growing again. This is largely being driven by the uptick in world trade over the second half of 2014.” However, IATA being IATA, optimism for 2015 was in short supply. “Recent concerns over the health of the global economy and a corresponding fall in business confidence have not yet impacted air cargo. But it is a downside risk that will need to be watched carefully as we move through 2015.”

On a geographical basis, as is clearly shown in the chart above, the December results were wildly uneven, ranging from the double-digit growth reported by carriers in the Middle East and Africa, to minimal growth in Europe and North America, and a significant decline in Latin America. For the full year, the disparity among regions was less, but still considerable, ranging from the 11.0% growth reported by carriers based in the Middle East, to just 0.1% growth in Latin America.

Middle East: Carriers from the Middle East have reported stronger growth than carriers from any other region for several years now, and that pattern continued in 2013, with Middle East-based airlines seeing an 11.0% y-o-y increase in full-year cargo traffic. The strong performance was partly the result of growth in intra-regional trade, but, as has long been the case, the main driver was the ability of the big carriers in the Gulf region to leverage their geographic location as a hub to connect Asia, Africa, and Europe.

Asia-Pacific: From the beginning of 2014, airlines based in the Asia-Pacific region have shown positive growth, reversing a several-year trend of declines. This trend of growth continued strongly in December, and for the full year, the region’s carriers reported cargo traffic up 5.4%. IATA calls this “the most important region for air freight.” Historically, this has been because much of the world’s consumer goods are manufactured there, but “increasingly because there are growing numbers of middle-income consumers. Emerging Asian economies have seen a sharp rise of imports in the past six months, which has supported the air freight businesses of carriers in this region.” Given that Asia Pacific carriers account for about 40% of global cargo traffic, the growth they are reporting is providing a solid boost to the worldwide total.

Europe: The Eurozone continues to teeter on the verge of recession, and this, combined with economic sanctions imposed as a result of the Russia-Ukraine crisis, has dampened trade. In addition, the big carriers based in Western Europe (Air France-KLM, Lufthansa, and IAG) have lost market share to competitors in Eastern Europe (Turkish Airlines), Russia (AirBridgeCargo), and the Middle East (Emirates, Etihad, Qatar, and Saudia). However, they nonetheless reported 3.0% growth in air freight traffic in 2014.

North America: After a weak start to the year, carriers in this region returned to solid growth in July through October. Weakness returned in November, when the region’s carriers reported their cargo traffic down 0.3% y-o-y. but this was followed by modest (2.8%) growth in December. For the full year, North American carriers reported their cargo traffic up 2.4%. This modest gain comes despite the obvious strength of the North American economies, and is an indication that the region’s carriers are losing market share to carriers from the Asia Pacific.

Latin America:  Economic weakness, particularly in Brazil and Argentina, but also in some of the smaller economies, has taken its toll on demand for air freight, and the region’s carriers reported traffic 2014 air cargo traffic almost flat with 2013.

Africa: Air freight demand in Africa was volatile through the first eight months of 2014, with cargo traffic growing in one month and declining the next, since August, the region’s carriers have been reporting y-o-y gains in the 9% to 12% range, bringing the full-year growth to 6.7%.