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Air cargo business grows cautiously in January: IATA

by Devesh Agarwal

The International Air Transport Association (IATA), which represents about 240 airlines comprising 84% of global air traffic, released its global air freight demand statistics for January 2013 which show signs of stabilisation of air freight industry on the back of encouraging growth towards the end of 2012.

Compared to the previous year, demand for air freight grew 5.0%, but this number is deceptive due to the exceptionally low base, caused by the timing of the Chinese New Year, which occurred in early February this year, causing the factories across east Asia to push out material in January, ahead of their closure. Compared to the December Freight Tonne Kilometers (FTK), air freight volumes in January were 0.9% lower. Year-on-year, capacity expanded by 2.1% and the global load factor stood at 41.9%.

Tony Tyler, IATA’s Director General and CEO said

“The air freight business is showing some encouraging signs. But it’s too early to be overly optimistic. While the decline has stopped, overall volumes are still below the levels of 2010 and 2011. Load factors are low. And the global economy is fragile. Our forecast remains for modest demand growth of 1.4%. But with weak load factors, yields are going to continue to be under severe downward pressure,”

Regional Highlights

  • Asia-Pacific carriers, which represent some 39.2% of global air cargo, saw year-on-year demand growth of 7.1% while capacity was down 0.4%. Adjusting for the effect of Chinese New Year, it is estimated that the region’s carriers saw demand growth of about 3.0%. The region’s airlines have captured about 60% of the growth in FTK volumes seen in January compared to October. This has been led by the acceleration in the Chinese economy and with export-dependent economies like South Korea and Chinese Taipei experiencing stronger global demand.
  • North American airlines saw a modest 0.6% growth compared to January 2012, while capacity was trimmed by 1.0%. US consumers are looking more positive about their economic prospects, and North American airlines have contributed 15% of the global FTK increase observed in January compared to October.
  • European airlines reported demand growth of 1.2% year-on-year, which was half the 2.4% growth in capacity. Persistent economic weakness in the Eurozone, which is a major market for air freighted consumer goods, is dampening global world trade growth, and will limit the growth in air freight volumes in 2013.
  • Middle Eastern airlines continued to be the most rapidly growing to be the fastest-growing, reporting a demand increase of 16.3% over January 2012. This was ahead of a 12.4% capacity expansion. The region’s airlines continue to benefit from route and capacity expansion into rapidly growing economies in West Africa and Asia.
  • Latin American airlines were the only regional grouping to report a fall in demand, with a 1.6% decline on the previous year. That was against a 10.2% increase in capacity. Latin American airlines have been adding air freight capacity to seize the opportunities of solid trade growth in many regional economies. This potential is also attracting airlines from other parts of the world which has led to very stiff competition.
  • African airlines reported a demand increase of 3.7% while capacity expanded by 13.9%. The region’s carriers benefitted from strong economic growth, particularly in West Africa.

A small known fact of the air cargo business is that by volume, less than 1% of total global freight is shipped by air; but by value it is almost 33%!!

Let us see how the leaders of the world’s air cargo business meet the challenges of sustainable business growth for 2013, when they meet in one weeks time at Doha, Qatar for the World Cargo Symposium.

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About Devesh Agarwal

A global frequent flyer with over 20 years and four million air miles, he combines his knowledge, experience, skills and passion in aviation, product management, branding, social media, logistics and marketing on Bangalore Aviation. He is ranked 6th on Mashable's list of aviation pros on Twitter. A product management expert he was awarded a silver medal at the Lockheed Martin innovation competition 2010.
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