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Demand growth strengthens in July

David Harris by David Harris
September 7, 2016
in Capacity & Demand, News Archives
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IATA July 2016 statsThe International Air Transport Association released its air freight market analysis for July 2016, showing a 5.0% year-over-year increase in worldwide cargo traffic (in freight tonne kilometers flown) – up from 4.3% in June, and the strongest y-o-y growth since the first quarter of 2015. International cargo traffic, which accounts for 87% of total traffic, was up 4.6%. For the first seven months of 2016, IATA reported total traffic up 1.2% and international traffic up 0.8%.

IATA’s numbers are line with our prediction two weeks ago that July traffic would be up even more than the 4.3% growth in June. While it is too early to assume that the recent strong growth is the beginning of a trend, we point out that there are a couple of reasons to be at least modestly optimistic.

  • First, last year’s peak season was notable mostly for its absence, so even a modest peak this year will boost year-over-year growth.
  • Second, the collapse of South Korea-based Hanjin Shipping, the world’s seventh-largest container line, has not only driven spot container freight rates through the roof (up as much as 50%, depending on lane), but also stranded a great deal of freight at sea – much of it consumer goods needed for the holiday shopping season. It is still too soon to know how much ocean traffic this will shift to air, but we expect at least a small boost.

But before you break out the Champagne, we point out that data published by WorldACD shows worldwide air cargo volume (in chargeable weight) up just 1.8% y-o-y for the month of July. This is a huge difference from the strong growth reported by IATA, and even IATA is pessimistic about the near future, saying we “must recognize that we face some strong headwinds on fundamental aspects of the business. Global trade growth is sluggish and business confidence is weak. And the political rhetoric on both sides of the Atlantic is not encouraging for further trade liberalization.”

But then, IATA is almost always pessimistic…

Leaving aside speculation about the future, one extremely interesting datum that jumps out of the above chart is that European carriers have gone from lagging their competitors in most of the rest of the world, to being leaders — with July’s 7.2% growth stringer than even that of the Middle East-based airlines. The reasons for this are not entirely clear, but IATA believes that one factor is that more traffic is flying directly between Asia and Europe, rather than making a stop in the Gulf.

Interested in learning more about where the airfreight industry is headed?  We encourage you to join us at the Cargo Facts Symposium in Miami, 10 – 12 October, where a panel discussion dedicated to this topic will be held. To register, or for more information, go to CargoFactsSymposium.com.

Tags: air cargo demandIATATrafficWorldACD
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