Demand for Airfreight services depict sluggish growth-IATA

Demand for airfreight services barely rose year on year in July, a new report by International Air Transport Association (IATA) has shown.

The report shows that demand for airfreight services as measured in freight tonne kilometers (FTKs) flown, rose by just 2.1% year on year in July.

Freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 3.8% year-on-year in July 2018. This was the fourth time in five months that capacity growth outstripped demand growth.

“July demand for air cargo grew at its slowest pace since 2016. We still expect 4% growth over the course of the year, however the downside risk has increased,,” said Alexandre de Juniac, IATA’s Director General and CEO.

IATA cautions that there are indications that slower growth will continue such as the inventory re-stocking cycle, which requires quick delivery to meet customer needs, ended at the beginning of the year.

There is also broad-based weakening in manufacturing firms’ export order books. Specifically, export order books in Europe started weakening in February and have fallen in China and Japan in recent months.

And Longer supplier delivery times are being reported by manufacturers in Asia and Europe, the top two global trading areas by volume. This typically means that they have less need for the speed afforded by air freight.

According to Alexandre de Juniac, IATA’s director general, the tariff war and volatile trade talks are rippling the global economy .Trade wars only produce losers, he said.

Geographically, all regions reported a growth in demand except for Africa and Latin America. The capacity of airfreight demand has grown and increased by 3.9% in the Asia-pacific area.

The Middle Eastern carriers had the biggest year-on-year improvement in air cargo volumes at 5.4%, the capacity increased by 6.3%.latin America experienced a slowdown in demand and the capacity reduced by7.8%.

IATA noted that the African countries had the hardest time since the freight demand went down by 8.3% compared to July. The capacity fell by 0.7% year on year.