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


Difficult conditions persisted through 2012 in the cargo market. There is a sense of optimism in the air, however, as the industry enters 2013.

According to the International Air Transport Association’s Cargo E-Chartbook for Q4 2012, cargo leaders surveyed in October 2012 are feeling positive about the year ahead. This can be credited to the continued lack of an inventory overhang; reversal in the decline in business confidence seen in Q3 and an improvement in consumer confidence in the US which could relieve some of the pressure of low demand from Europe.

Difficulties persist however, and they are quite similar to those grappled with the previous three quarters of 2012. Freight load factors and aircraft utilization rates have declined on the back of falling demand. Ongoing fleet expansion and yields continue to trend downward with oil prices remaining high. Europe continues to be the weakest region; European confidence fell further in Q4 which can be seen in the decreasing demand for air-freighted commodities. Furthermore, even though world trade volumes continue to expand, growth has slowed as the European economy contracted overall in 2012.

Weakness in developed economies has driven the fall in air freight demand, led by Europe and important markets connected to it. Economically, Europe looks set to remain slow in 2013, with the US and Japan seeing slightly improved economies. Like last year, emerging regions continue to grow at a much faster pace than Western economies; Russia, India and China look to maintain their relatively looser fiscal positions (compared to Europe) while Asia Pacific, Africa and Latin America are all expected to see stronger growth in 2013.

Demand overall is expected to remain low but with business confidence looking up, stability is anticipated for the coming months. In Q4, demand drivers remained week, mainly due to the decline in economic improvement expectations by European consumers coupled with weak capital investment intentions from Japan and the UK. Low demand isn’t helped by the continued high price of jet fuel. Even though prices have dropped 10% since the most recent peak in September 2012, the cost remains high at 130 USD a barrel.

In a reversal from the previous three quarters, freight load factors fell in Q4. This can be attributed to the recent decline in air freight demand and an increase in the freighter fleet. Fleet expansion has also placed downward pressure on aircraft utilization rates, which declined significantly over recent months. Unfortunately, this trend may continue in the months ahead, as the existing widebody fleet has expanded by 6 percent this year. Sea freight rates and also its volume are a cause for concern, continuing to show solid growth in 2012. Emerging regions are generating most of the growth in container shipping, where developing economies are demanding more bulk commodities.

In sum, with improved business and consumer confidence in some regions and cargo leaders’ positive traffic growth expectations, 2013 is looking much more optimistic than the past 12 months.

Cargo market analysis chartbooks are published quarterly on IATA web pages.

Text by Jacy Meyer

Published January 7, 2013

Category: Market updates