IATA: Air cargo performance even worse than post 9/11. The FUD factor at work.

SCARY!!!!, there is no other word to describe the performance numbers and the forecast from IATA, the association representing 93% of the global commercial air transport industry.

For the month of December, it is now official — ALL regions of the world, have reported major declines in cargo performance in December 2008 when compared to December 2007. Across the globe, air cargo, a vital barometer of world trade, is down 22.6%.

In November, Africa was the sole region showing positive compared to a year ago. Again, the Asia Pacific region, which represents 45% of global air cargo, led the world with a whopping 26% fall, when compared to December a year ago, this on top of 16.9% decline in November.

As per Giovanni Bisignani, IATA’s Director General and CEO

“The 22.6% free fall in global cargo is unprecedented and shocking. There is no clearer description of the slowdown in world trade. Even in September 2001, when much of the global fleet was grounded [post the 9/11 terror attacks on New York city], the decline was only 13.9%,”

IATA December 2008 vs 2007 passenger and freight performance. Bangalore Aviation
The year on year performance does not reflect the oncoming tsunami of collapsing world commerce and trade. On an annual basis air cargo is down 4% with Latin America leading the world down 13.5%. Asia Pacific is down 6.6%.

IATA Airline Passenger and Freight Performance 2008 vs 2007 Bangalore Aviation
Those of us, hoping for a global recovery in 2009, data from the Economist Intelligence Unit (EIU) and IATA, shatter those hopes. Business and consumer confidence are at historic lows. Leaders at the World Economic Forum meeting at Davos are talking about a mind numbing 0.5% growth for 2009. While India and China will experience moderate growth of around 6%, the recession in the developed economies will ensure the global recovery will commence only in 2010.

World Trade Bangalore Aviation
Airline industry outlook 2009 2010
Semiconductors shipments are one the highest users of air cargo and a key barometer in global electronics production. The shipment performance of the global semiconductor industry reflects the deepening impact of the global recession.

world wide semiconductor shipments
Across the globe, the aviation market have been hit, and hit hard. Revenue Passenger Kilometers (RPKs) are down, and Freight Tonne Kilometers (FTKs) are way down.

aviation markets hit hard
Airlines have been retiring or parking their aircraft in record numbers. The silver lining in this saga, is that airlines, mostly in the middle east, have been taking deliveries of new more fuel-efficient aircraft, and refreshing their fleet to cut down operating costs.

aircraft retired or parked
Airlines across the world are facing deepening losses, and I am sure we are going to see the many airlines and brands simply disappear during 2009. US airlines were smart and cut their capacity ahead of the drop in demand, unlike airlines in other regions. This will aid them in returning to profitability sooner.

airline industry outlook and profits. Losses to deepenairline capacity cuts
The bad news is going to continue in 2009. Passenger markets are expect to decline another 3%, which freight will decline another 5%.

IATA passenger projections 2009air cargo freight and global trade projections 2009
Part of this precipitous drop in global trade is due to the “FUD Factor“. Fear Uncertainty and Doubt. Every procurement manager, and individual consumer has retreated in to a shell. Stop all purchases. Buy only the bare minimum. This has slammed the brakes on the global economy so hard, that there is hurt everywhere.

Life is going to be difficult, but the world is still here. Caution is needed, but so is pragmatism. Surely there is no need to retreat so hard, and withdraw so deep.

As the world emerges from this shell, and consumption re-starts, the shelves are going to be bare, as existing inventories would have been fully consumed, and capacity cuts in manufacturing will be take supply well below demand. At that point air cargo will increase with a vengeance.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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