Trade tensions weigh on global air freight demand

Middle East and Asia-Pacific carriers record sharpest declines in cargo volumes in July, International Air Transport Association says

Middle Eastern airlines’ freight volumes decreased 5.5 per cent in July 2019 compared to the year-ago period, according to IATA. Paul Thomas / Bloomberg
Beta V.1.0 - Powered by automated translation

Global air freight markets suffered a 2.2 per cent year-on-year decline in demand in July 2019 due to trade tensions, the International Air Transport Association (Iata) said on Thursday. This marks the ninth consecutive month of year-on-year decline in freight volumes.

“Trade tensions are weighing heavily on the entire air cargo industry. Higher tariffs are disrupting not only trans-Pacific supply chains but also worldwide trade lanes,” said Alexandre de Juniac, Iata's director general and chief executive.

“While current tensions might yield short-term political gains, they could lead to long-term negative changes for consumers and the global economy. Trade generates prosperity. It is critical that the US and China work quickly to resolve their differences.”

The global Purchasing Managers Index for manufacturing and export orders has indicated falling orders since September 2018. And in July, all major trading nations reported falling orders for the first time since February 2009.

Airlines in Asia-Pacific and the Middle East suffered sharp declines in year-on-year growth in total air freight volumes in July 2019, while North America and Europe experienced more moderate declines. Africa and Latin America both recorded growth in air freight demand compared to July last year.

Middle Eastern airlines saw the sharpest drop in freight demand of any region with freight tonne kilometres of cargo decreasing 5.5 per cent in July, compared to the year-ago period. Trade tensions, the slowdown in global trade and the restructuring of airlines also affected demand. Capacity increased 0.2 per cent.

Asia-Pacific airlines recorded a 4.9 per cent decline in demand for air freight in July 2019, while European airlines saw a decline in demand of 2 per cent.

Latin American airlines  experienced an increase in freight demand growth in July 2019 of 3 per cent compared to the same period last year as the Brazilian economy recovered, and capacity increased 2.7 per cent. However, concerns regarding the outlook for some key Latin American countries, including Argentina, remain.

On the other hand, African carriers posted the fastest growth of any region in July 2019, with an increase in demand of 10.9 per cent due to strong trade and investment links with Asia, Iata said. Capacity grew 17 per cent year-on-year.