A look back at the cargo market – IATA Q3/2014 cargo chartbook synopsis


Growth in both traffic and yields is expected in the coming months, thanks to positive economic news coming from many parts of the world. 

The Q3/2014 Cargo E-Chartbook from the International Air Transport Association (IATA) is reporting positive sentiment from the cargo heads interviewed in July 2014. Emerging Asia and the US are driving the demand for air-freighted commodities, and business confidence continues to point to expansion. However, the continuing Russia-Ukraine crisis has weakened both consumer confidence and economic activity in Europe. 

Air freight volumes are still showing solid gains, mainly thanks to the economic situation in many regions. The outlook for the remaining months of 2014 is positive, although not as bright as at the beginning of the year. Weather-related issues in the US earlier in the year made for a weaker than expected American economy, which in turn effected the industry’s global outlook. This is most likely a temporary limitation as improved employment and manufacturing gains are projected. Despite the Russia-Ukraine crisis, Europe and the US are expected to grow in 2014. 

This economic influence is reflected in air freight volumes which remain 4–5 percent above year ago levels. However, the growth has not translated into an expansion of international trade mainly due to on-shored production and rising wages in low-cost economies.

Diverging developments across the world have led to uncertainty in the demand environment. World trade volumes have fallen in Europe, but rallied in Asia. Demand drivers too show a regional imbalance. While consumer confidence in China remains stable – and is improving in the US – in Europe, confidence is sinking. Business confidence should signal expansion, but we are not seeing much improvement. Overall, demand drivers have improved compared to a year ago, which in turn points to a stronger demand for air-freighted commodities. 

Aircraft utilization rates are showing some improvement, which could be eased as the industry is expected to expand the existing widebody fleet by more than 7 percent in 2014. There is a slight improvement in air freight yields as well compared to a year ago. While this helps reduce pressure on profitably, cargo financial performance remains weak. 

Air freight rates remain stable, but show no improvement compared to 2013. Sea freight rates have shown improvement with the Americas and Asia leading the demand for container shipping. On a more positive note, jet fuel prices have eased slightly since the mid-year peak. Supply disruption has been an increased concern, but thanks to weakened demand in Europe, crude oil prices have actually decreased, although still remain high at around $120/bbl. 

Thanks to overall minor improvements compared to the first half of 2014, cargo heads are planning on stronger growth in traffic volumes for the coming months. 

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

Text by Jacy Meyer


Published September 29, 2014

Category: Market updates