WTO global trade barometer suggests continued weakness into 4Q for airfreight

The World Trade Organization’s (WTO’s) Goods Trade Barometer indicates that airfreight is down and below trend through to September 2019, which suggests air cargo will see continued overall weakness into fourth quarter of this year. Though some component indices have stabilized, others continue to decline, reflecting heightened trade tensions and rising tariffs in key sectors in line with reports IATA, Drewry and AAPA released for the same period.

The WTO barometer for September indexed airfreight at 93.0, a figure which sits well below that seen at the same time last year of around 107.0. The WTO’s barometer indicates the decline in air cargo began in 3Q last year, plummeting below the 100-point trend baseline following the start of 2019.

Other component indices that continue to decline include electronic components and raw agricultural materials, which sit at 88.2 and 91.4, respectively, on the barometer. That electronic components trade was the weakest of all indices possibly reflects recent tariff hikes have affected the sector, according to the WTO.

Meanwhile, other indices, such as export orders, automotive products and container shipping have stabilized to on-trend territory with figures of 97.5, 99.8 and 100.8, respectively.

The WTO’s latest index for overall global trade read 96.6, which is a slight improvement compared to its previous reading of 95.7 but remains below the threshold value of 100.

These figures do not bode well for air cargo as it moves into its traditional peak season, though stakeholders still maintain hope they will see improvements in volumes as the holidays approach or that year-over-year declines will lessen as the industry approaches the period it first saw drops in volumes last year.

It is, however, likely that the general decline in global airfreight has not affected regions equally given reports of volume growth in Africa and shifts in manufacturing business to Southeast Asia over the past several months. Companies including DHL and Cargolux have also continued investing in expansion of capacity and networks, likely to strategically navigate to regions hosting opportunities for growth.