Weakness in air cargo drags on into July, IATA reports 

The International Air Transport Association (IATA) released data today indicating that cargo traffic, measured in freight tonne kilometers (FTKs), decreased by 3.2% year-over-year in July. Year-to-date demand is down 3.5% y-o-y. The further decline in traffic from last month suggests the air cargo industry is still experiencing the impact of political economic uncertainty.  

Freight capacity growth rose 2.6% y-o-y in July, with no growth compared to the month prior. For the first seven months of 2019, capacity increased 2.3%. According to IATA, this marks the ninth consecutive month in which annual capacity posted growth while demand declined.  

With this decline in demand, freight load factor has also eased and is currently down 2.7 percentage points for July and 3.2 percentage points for the first seven months of 2019, compared to the same respective periods the year prior.  

IATA credits the U.S.-China trade dispute as massively impacting global volumes. In the first seven months of 2019 trade volumes between the U.S. and China fell by 14% compared to the same period of 2018. The industry can expect further tariff increases scheduled to come into effect as “leading to a more pronounced impact” of the U.S.-China trade war on volumes for the remainder of the year, according to IATA. 

Even though the Asia-Pacific and North America declines account for around 3 percentage points of the July losses, IATA recognizes weakness in air cargo more broadly. FTKS are also lower on routes to and from Europe, Latin America and the Middle East, compared to the same period the year prior, according to the report.  

Airlines in the Middle East, Asia-Pacific and North America regions were the weakest performers for the month. Their total FTKs fell 5.5%, 4.9% and 2.1% y-o-y, respectively. Meanwhile total capacity for the regions increased 0.2%, 2.5% and 1.6%, respectively. Year-to-date, airlines in these regions saw varied result: Middle Eastern carriers saw a 3.8% y-o-y decrease in FTKs and 1.5% increase in capacity; airlines in the Asia-Pacific region saw a decrease of 7.1% y-o-y in cargo traffic and 0.2% increase in available capacity; and North American airlines saw a slight decrease of 0.7% in demand, while available capacity increased by 1.8%.  

Meanwhile, European airlines saw a 2.0% y-o-y decrease in freight demand y-o-y, and a 4.2% increase in available capacity. For the first seven months of 2019, European carriers’ traffic is down 2.0% y-o-y, with an increase in capacity by 4.0%.  

Latin American airlines saw a 3.0% y-o-y increase in July freight demand. The growth marked a slight rebound from the 1.0% decline in demand the region posted in June. Meanwhile, capacity increased by 2.7% y-o-y. Year-to-date demand and capacity in the region are up 1.3% and 8.4%, respectively. According to IATA, despite positive recent economic outcomes, including the recovery of the Brazilian economy in 2Q to avoid recession, the industry remains cautious about the sustainability of this month’s FTK improvement given continued concern regarding the outlook for Argentina and possible spillover effects to elsewhere in the region. 

Africa saw the strongest performance for the fifth month in a row, with airfreight demand increasing 10.9% y-o-y, continuing an upwards trend that became evident in mid-2018. Capacity grew 17.0% y-o-y, despite the small size of the region’s market, which makes up only 1.6% of the world’s share of airfreight. Year-to-date, demand and capacity are up by 4.9% y-o-y and 13.6%, respectively.