A look back at the cargo market – IATA Q3/2017 cargo chartbook synopsis

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Another positive quarter for the air cargo market. In its latest Cargo Chartbook, the International Air Transport Association (IATA) cites continuing strong demand for freight as well as a rising yield trend.  

The word for Q3 is hopeful as annual growth in air freight tonne kilometers (FTKs) accelerated to 11.8 percent – its fastest pace since late 2010. European and Asian Pacific carriers made sizeable contributions to this growth, but the pick-up was driven largely by North American airlines. Traffic increased on all of the major international markets with year-on-year FTK growth remaining in the region of 10-15 percent. Cargo throughput increased at number of key freight airports during August. Growth came primarily from Asia; while Miami and the Middle East airports (notably Abu Dhabi) showed weaker numbers.

Again, the positive momentum in air freight growth can be contributed to a rise in consumer confidence, which translates into higher consumer spending and thus a demand for air freighted goods. The trade backdrop also improved: volumes grew by 4.1 percent in H1 2017. This can be explained by a 5.9 percent increase in emerging market trade. The global Purchasing Managers Index (PMI) for export orders paused during the first half of the year. Nonetheless, the order books remain robust and the measure is consistent with year-on-year FTK growth.

Traditional demand drivers for the air freight industry have been strong. The quantity of silicon material shipments increased by 10.1 percent year-on-year last quarter – almost doubling its five-year average growth rate. Another contributing factor helping to drive the pick-up in FTK growth is the recent fall in business inventory-sales ratio in the US. The ratio has now stopped falling, which means the annual industry-wide FTK growth rate may be nearing a peak.  

So far this year, 817 tonnes of capacity have been added to the freighter fleet – nearly half the amount added in the same period last year.  And almost eight times as much belly payload capacity was added through wide-body passenger deliveries, but even this was 6 percent lower than was added last year.  

Despite indicators suggesting that the current cyclical upturn may be nearing its peak, heads of cargo remain confident about the outlook for demand over the rest of the year.   

Summary by Shelly Nyqvist

Cargo market analysis chartbooks are published quarterly on the IATA website

Published October 6, 2017

Category: Market updates

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