A look back at the cargo market – IATA Q2/2013 cargo chartbook synopsis


Confidence is the key word for the air freight business this year. Keeping the sentiment high is significant to the ongoing positive outlook for the remainder of 2013, according to IATA. 

The International Air Transport Association (IATA) has released its Cargo E-Chartbook for Q2 2013. While the news overall points to sluggish activities, conviction in a number of areas is leading cargo heads to remain positive about the rest of the year.

Recent months have seen air freight volumes stall, load factors weaken and yields continue the steady decline experienced over the past two years. Why? Continued doubt in business confidence and slow world trade growth. Although current conditions are tough, leaders surveyed in April expect both volumes and yields to improve this year.
A moderate pick-up in economic growth this year and consumer confidence both in Europe and the US are the two main reasons cited for the optimistic belief. Global economic growth in 2013 is only expected to improve slightly on 2012, and there is still the significant regional variation to keep in mind. Looser monetary policy is helping emerging economies expand at a much faster pace than advanced economies, and looser bank lending standards in the US have supported faster growth there than in Europe. 
The slight growth in air freight volumes seen at the end of 2012 did not sustain itself mainly due to a lowering of business confidence. This has led to a weakened demand environment over recent months, but experts believe current levels of business confidence do point to a modest pick-up in economic growth this year. If that occurs, air freight markets should see some improvement in the months ahead. The positive news is there is no sign of an inventory overhang, which suggests businesses have no immediate need for a reduction in the quick transportation of cargo. However, even though European consumer confidence has continued to improve steadily in 2013, and the US consumer outlook has reached the highest levels since the start of 2008, this has not been enough to sustain the pick-up in air freight volumes experienced in late 2012. 
Two issues are affecting capacity – weakened load factors as the growth trend in air freight markets lost momentum and fleet expansion. Air freight rates remain weak and have been in decline since early 2011. Sea freight rates, after increasing in 2012, have plummeted, reflecting the weakening demand for sea freight. This can especially be seen in several regions where demand for container shipping has declined. In Latin America and North Europe, demand for sea freight has actually contracted.
Despite the tough operating conditions airline cargo businesses are currently experiencing, the outlook for air freight remains optimistic. Heads of cargo expect traffic volumes to increase over the next 12 months, and the outlook for yields has picked up since the start of the year.
Cargo market analysis chartbooks are published quarterly on IATA web pages.
Text by Jacy Meyer

Published July 22, 2013

Category: Market updates