Winners and losers in the first quarter of 2013

The International Air Transport Association today released its summary of worldwide air freight demand and capacity in March 2013. IATA’s results confirm our own analysis posted here two weeks ago: That demand for air freight in March would continue the pattern of low-single-digit declines seen in the recent past.  IATA has not changed its full-year 2013 forecast of 2.7% growth in demand, but, like many other observers, appears to believe that a return to growth hinges on what happens in the Europe.

According to IATA: “recent developments have raised questions about the pace of the global economic recovery. China’s first quarter economic growth result was solid but below expectations, several Eurozone confidence indicators showed declines in March, and the US government enacted a series of spending cuts. The recent weakening in air freight demand appears to be reflecting the same uncertainty.”

However, IATA goes on to point out that, below expectations or not, China’s economic growth in the first quarter was over 7% y-o-y, that the effects of government cutbacks in the US were relatively minor, and that business confidence indicators in Asia and North America continue to rise. Europe, on the other hand, is still mired in economic uncertainty. And since Europe is a major trading partner of both the US and China, meaningful growth in air freight demand is unlikely without economic recovery in Europe.

The chart below shows IATA’s breakdown of airfreight demand and capacity by carrier home region. If there is one obvious takeaway from it, it is that carriers from the Middle East, with their big fleets of cargo-friendly widebody passenger aircraft (particularly 777-300ERs) and ever-widening networks, are musclng aggressively into the airfreight arena. The double-digit gains reported by the big four carriers from the Gulf Region (Etihad, Emirates, Qatar, and Saudia), as well as by Turkish Airlines, are coming at the expense of the European and Asian carriers.