A look back at the cargo market – IATA Q4/2013 cargo chartbook synopsis


As 2013 came to a close, news for the cargo industry remained mixed. While improvements had been seen, and some more were expected, not all the news for Q4/2013 were encouraging. In the latest IATA Cargo E-Chartbook, cargo heads surveyed in October 2013 still remain broadly optimistic.

The optimistic news comes on the heels of a somewhat better demand environment and continuing improvement in forward-looking indicators. The economy has also been a source of confidence as has the rise in air freight growth. However, the on-shoring of production has been the most damaging, and capacity continues to increase. 

While the global economy overall has remained weak throughout 2013, bright spots have emerged. Air freight growth has seen a slight improvement in 2013 compared to 2012. However, better economic conditions have not brought an increase in international trade. Production has been on-shored for a number of reasons, including rising wages in low-cost economies and a recent rise in protectionist measures. Even with the minor improvement in air freight growth, expansion rates are still basically flat on all major routes, including those connected to the Far East.
The most upbeat news is coming from the demand environment and demand drivers. Business confidence has been on the rise since the start of the quarter and consumer confidence in Europe remains strong. In China, a decrease in consumer confidence has slowed thanks to a stronger economic performance. This has assisted in the rise in demand for air-freighted commodities such as semi-conductors. 
World trade growth remains soft, but there has been encouraging developments in emerging market import and export volumes, plus there is still no indication of an inventory overhang. The demand drivers are also reasons for confidence – the US consumer economic outlook remains solid; monetary policy stimulus in Japan is encouraging and capital investment intentions of UK companies remain broadly stable.
After declining for most of 2013, aircraft utilization rates and freight load factors have bottomed out. While stability in the freighter fleet has helped to sustain aircraft utilization rates, an expected increase in deliveries in 2014 could place downward pressure on these rates. And this comes as air freight rates continue to narrow, while sea freight rates appear to be recovering thanks to an increase in demand. Jet fuel prices continue to place pressure on profits and even though the decline in load factors has stabilized, levels remain low.
Looking ahead, cargo heads believe the outlook is positive. Taking cues from the demand backdrop, an increase in traffic is expected over the next 12 months, as well as a slight rise in yields. 
Cargo market analysis chartbooks are published quarterly on the IATA website.
Text by Jacy Meyer

Published January 3, 2014

Category: Market updates