A look back at the cargo market – IATA Q2/2015 cargo chartbook synopsis

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Cargo markets had a tough beginning to 2015, but according to the International Air Transport Association (IATA), the second half should be a bit calmer. The mood, however, is not confident among cargo company heads.

As IATA recaps in its latest Cargo eChartbook, the year 2014 was a strong one for air cargo (freight tonnes carried by air grew 4.5 percent) leaving many in the industry to believe this upswing would continue into 2015. Economic growth and world trade was also seen to be growing, but it has not materialized as much as had been hoped, partly due to a build-up in inventories.

The economic forecast and how it might impact cargo markets in 2015 is interesting compared with the past few years. In 2014, for example, there was an upturn in the economic cycle and an increased demand for air freighted commodities in advanced economies. A look at the numbers shows the strong influence: In 2014, advanced economies contributed 51 percent to total global economic growth, compared to 18 percent in 2013. While this pick-up was expected to continue, factors such as severe weather in the US during Q1 and sovereign debt deliberations in Europe combined with weakness in emerging markets and a slowing of the Chinese economy does not encourage optimism. 

Potential bright points come in the form of improved growth performance in advanced economies and looser bank lending standards.

The build-up in inventories is what is having the most impact on air cargo demand, and it looks to continue in the short term. Looking a few more months ahead, however, strong consumer confidence and continued low fuel prices could have a positive effect. 

Overall, freight load factors have been slipping in 2015, and this challenge is worsened by an increase in passenger aircraft deliveries which adds hull capacity. Generally speaking, for every one tonne of hull capacity added by a wide-body freighter, three tonnes will be added by a wide-body passenger aircraft.

Regional areas of positive growth include cargo airlines in the US, which are showing improved profits, and in Asia. Since 2010, two out of five freight tonnes of new payload capacity have been added by Asian airlines which is suggestive of the region’s growing importance in global trade and aviation.

Cargo market analysis chartbooks are published quarterly on the IATA website.

Text by Jacy Meyer

 

Published July 14, 2015

Category: Market updates

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