Does November decline signal a turnaround?

IATA November 2015 summaryThe International Air Transport Association released its air freight market analysis for November 2015, showing a 1.2% year-over-year decline in worldwide cargo traffic (in freight tonne kilometers flown). This 1.2% overall loss was the result of a 1.3% decrease in international traffic and a 0.4% decrease in domestic traffic.

Three weeks ago, when we looked at November cargo data from some of the world’s major carriers, airports, and handlers, we predicted that both IATA and WorldACD would report flat or slightly negative  y-o-y growth for the month. So IATA’s report of a 1.2% y-o-y decline in volume was about what we expected. For its part, World ACD reported November cargo volume (measured by chargeable weight) down 0.9% y-o-y. Again, in line with our expectation.

For the first eleven months of 2016, IATA said worldwide air cargo traffic was up 2.3%, led by 2.6% growth in international traffic, while domestic traffic was flat with the first eleven months of 2014.

In the first two months of this year, when labor strife at the US West Coast ports, and a massive automobile recall in the US drove shippers to shift goods from ocean to air, overall traffic was up 7.5%, but since then it has become clear that underlying growth in air freight traffic is fairly weak.

Putting the IATA year-over-year cargo traffic results in list form gives a fairly clear picture of the year through November:

What this shows, for good or ill, is remarkable consistency in demand growth in 2015, with no big swings either way once the impact of the port slowdown and automotive recall were washed out. When December results are in, we will almost certainly see a slight gain in full-year cargo traffic over 2014. Not a great year, but, given the hand-wringing over the state of the economy in China, Europe, and Latin America; and the political instability in the Middle East and Ukraine; not a bad one, either.

Commenting on the November results, and the prospects for the future, IATA said: “The freight performance in November was a mixed bag. Although the headline growth rate fell again, and the global economic outlook remains fragile, it appears that parts of Asia-Pacific are growing again and globally, export orders are looking better. In fact, the downward trend in FTK volumes appears to be bottoming out. But there is a great deal of uncertainty. The current volatility of stock markets shows how much the health of the global economy – upon which air cargo depends – remains on a knife-edge.”

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