The IATA August result is in line with our prediction two weeks ago that we would continue to see moderate growth in worldwide air freight demand, albeit with a slight fall-off from the 5.0% y-o-y gain reported in July. (And on the subject of July, IATA has revised its report for that month, and now says growth in July was actually 4.0%, not 5.0%.)
The big story in the August data is the reversal of the long-term trend of Middle East-based carriers taking market share from their European competitors. In fact, European carriers reported the strongest growth in August, with traffic up 6.6% y-o-y, while carriers from the Middle East reported their worst result since July 2009, with traffic up just 1.8%.
According to IATA, “this suggests that Middle Eastern carriers have lost business to European airlines on the Europe-Asia route, with more traffic flying directly between Europe and Asia.” While this is likely correct, we point out that the European carrier with the strongest cargo traffic growth in recent years is Russia-based AirBridgeCargo, and that in addition to more cargo flying direct from Asia to Europe, there has also been a big increase in cargo moving between Asia and Europe through ABC’s Moscow hub – at the expense of Middle East hubs such as Dubai and Abu Dhabi.
One reason for the shift to Moscow as hub for Asia-Europe traffic is fuel consumption. The distance from Shanghai to Frankfurt, for example, is 11,300 km via Dubai, but only 8,900 km via Moscow – 2,400 km shorter.
As always, IATA offered both positives and negatives in its outlook for the future. On the positive side, this year’s peak season is expected to be relatively strong – not the huge spike it once was, but likely stronger than last year (perhaps with a bit of a boost from the Hanjin collapse, although that remains to be seen). On the negative side, world trade growth has stalled, and, given the political rhetoric in the US and Europe, protectionism could well rise – with a negative impact on international air freight demand.
IATA’s conclusion seems to be that we can expect continued solid growth in worldwide air cargo traffic in the near term (i.e. through the end of the year), but that the outlook for the longer term depends on which way the political winds blow.