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IATA reports cargo traffic up 5% in August

David Harris by David Harris
October 1, 2014
in Capacity & Demand, News Archives
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The International Air Transport Association released its air freight market analysis for August 2014, showing an overall 5.1% year-over-year increase in worldwide cargo traffic. The growth came from a 4.8% increase in international traffic and a 6.6% increase in domestic traffic. For the eight months of 2014, IATA reported total cargo traffic worldwide up 5.1%. (We will analyze August data from WorldACD tomorrow, and see where it differs from what IATA reports.)

IATA August 2014 summaryAccording to IATA, the rate of growth in August is down a little from the 5.8% y-o-y gain IATA reported in July, but higher than the average for the year to date, and IATA’s outlook for the rest of the year remains cautiously positive: “The outlook for air cargo is clearly getting better. However, there are some limiting factors on the extent of potential gains. Demand for air cargo is growing more slowly than global economic activity. Businesses are reported to have more confidence in the future, but the list of political and economic risks continues to moderate how that confidence translates into actual activity.”

It is also worth pointing out that data gathered by Netherlands-based WorldACD have indicated somewhat stronger growth so far this year than what is being shown by IATA. World ACD  found air freight demand in August to be up 6.6%, compared to IATA’s 5.1%. However, this is not as big a gap as we have seen in previous months, and could simply be a result of the fact that the two organizations collect data in different ways. IATA gathers reports of cargo traffic (in revenue tonne kilometers flown) from member airlines, while WorldACD gathers cargo volume data (in tonnes) directly from the airwaybills of over fifty carriers.

Turning back to IATA’s report, we look at the August results by geographic region:

Middle East: Carriers from the Middle East continue to report strong growth in their cargo business, with traffic up 7.8% y-o-y in August, a little below the year-to-date average of 9.6%.

Asia-Pacific: Airlines based in the Asia-Pacific region have long carried the greatest share of global cargo traffic (about 40%), and they continue to do so. However, in the last few years, they have faced ever-increasing competition from carriers based in the Middle East, and this, combined with the weak demand environment led to declining traffic. However, beginning in January 2014, Asia’s carriers have reversed this trend, and are now reporting solid growth, with traffic up 6.3% in August, and 5.2% for the year to date. Commenting on the performance of Asia-Pacific carriers, IATA said: “Demand for freight on Asia Pacific carriers has been supported by trade developments – emerging Asia trade volumes have now recovered after declining throughout Q1, with a solid expansion in volumes in June and July. The Chinese economy has slowed compared to double-digit rates of expansion during previous years, but government stimulus earlier this year has helped manage the transition onto a slower growth path. In fact, recent results of purchasing manager surveys (Markit) indicate gains in business activity in the manufacturing sector and a notable rise in export orders. This should help sustain positive trade momentum in the region, which in turn ought to continue driving demand for air freight services on local carriers.”

Europe: The recovery of the European economy has slowed almost to a halt, and the region’s carriers reported cargo traffic up just 1.4% in August. IATA points out that The Russia-Ukraine crisis and ensuing EU sanctions have resulted in downward pressure on growth momentum in the region, particularly for nations like Germany with significant exposure to Russian industries. But IATA adds: “Latest trade data, however, show that there has been some pick-up in Eurozone imports and exports. If the momentum continues, it could alleviate some of the demand weakness in air freight markets.” For the first eight months of 2014, European carriers reported cargo traffic up 2.7%.

North America: After a weak start to the year, carriers in this region have begun to see strong growth, with August traffic up 5.2%. For the year through August, North American carriers reported cargo traffic up 2.3%. Looking ahead, IATA said: “Latest data show a rebound in trade volumes and underlying growth trends in business activity are positive, which should provide some support for stronger growth in trade and air freight demand ahead”

Latin America:  Trade in the Latin American region deteriorated in the early part of this year, and this curtailed air freight demand for the region’s carriers. After a brief spike in June and July, the region has returned to its earlier trend of low or no growth, with carriers reporting August traffic up just 1.1%. For the first eight months of 2014, Latin American carriers reported their cargo traffic up 1.0%.

Africa: Air freight demand in Africa remains volatile, with cargo traffic growing in one month and declining the next. In August, cargo traffic for the region’s carriers was up 9.2%. However, as IATA points out: “There is also the issue of high volatility in volumes for this region, which could cause some distortions in the monthly figures. This is the second consecutive month of strong growth, but given the slowdown in major economies like South Africa this year, it is too early to conclude there is acceleration in the growth trend.”

Tags: August 2014demandIATATraffic
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