A look back at the cargo market – IATA Q4/2017 cargo chartbook synopsis

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A positive end to 2017 in regard to demand for air cargo. In its latest Cargo Chartbook, the International Air Transport Association (IATA) cites favorable supply and demand dynamics as a key driver. 

Despite a slowdown from the seven-year high seen in the previous three months, industry-wide air freight tonne kilometers (FTKs) grew by 8.8 percent. Each region registered positive contributions to this growth, however European and Asian Pacific carriers registered more of a slowdown compared to the previous period. 

Traffic increased on the four major segment-based trade lanes with year-on-year FTK growth remaining in the region of 10 to 15 percent, led mostly by international freight flown within Asia. Cargo throughput varied this period with Shanghai posting the fastest growth (10.9%), while Los Angeles and Abu Dhabi showing negative numbers.

Again, the positive momentum in air freight growth can be contributed to a rise in consumer confidence, particularly in emerging markets. The trade backdrop continued to improve even as the inventory cycle tapered off: world volumes grew by 5.1 percent year-on-year. The global Purchasing Managers Index (PMI) for export orders increased in recent months, taking it to its highest level since March 2011. The indicator remains consistent with year-on-year FTK growth of just under 7 percent in the first quarter of 2018.

With reference to cargo payload, the amount added from deliveries of freighter aircraft was the lowest since 2008. That said, additions from belly-capacity via wide-body passenger fleet deliveries are estimated to still dominate. 

Cargo yields rose by 13.1 percent year-on-year in October 2017, which is the fastest pace in seven years. More favorable supply and demand are helping to drive cargo yields as well as offset pressure on breakeven loads from higher fuel prices. 

Meanwhile, freighter utilization is currently back at levels last seen in 2012.And this increased utilization will help to reduce unit costs and reinforce financial performance.

Overall not a bad end to the year, and the outlook seems bright for the year ahead with heads of cargo expecting volumes to rise during 2018.  

Summary by Shelly Nyqvist

 Cargo market analysis chartbooks are published quarterly on the IATA website 

Published January 19, 2018

Category: Market updates

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