Trade war weighs on global air freight

Sunday, August 11, 2019
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14866]

London: Mutlaq Munir

The International Air Transport Association (IATA) released data on global air cargo markets, which revealed a remarkable drop in demand (measured in tonnes of cargo per kilometer) for the eighth consecutive month of 4.8 % in June 2019, compared to same period last year.
Modest signs of recovery seen in recent months appear to have been premature, especially given the large-scale contraction in all regions except Africa, in June, with shipping rates remaining low, while the "load factor" continued to decrease.
Globally, trade growth continues to decline slightly, while tariff increases resulting from the US-China trade dispute have exacerbated corporate uncertainty. Alexander de Juniac, chief executive and chief executive officer of the International Air Transport Association (IATA), pointed out that the global trading sector continued to suffer from worsening trade tensions, particularly US relations. which had led to a steady contraction of global shipping markets. He stressed that no one will emerge victorious in a trade war, that borders open to trade would contribute to the spread of sustainable prosperity and that political leaders should focus on this priority. Airlines in the Asia-Pacific and Middle East regions again saw a sharp decline in annual growth rates in total freight volumes in June 2019, while Africa was the only region to record growth demand.
Compared to the same period last year, airlines in the Asia-Pacific region recorded a 5.4% drop in air cargo demand in June 2019 and the US trade war and China was not the only one responsible for this decline, despite its important role. Demand (measured in tonnage per kilometer) in the Asian market decreased by 10% over the last year, while air cargo capacity increased by 1.8% over the same period.
North American airlines recorded a 4.6% drop in freight rates in June 2019 compared to the same period last year. This development is accompanied by a 1.9% increase in cargo capacity compared to last year. Trade tensions between the United States and China quickly weighed on performance, as demand (measured per tonne of freight per kilometer) in Asia declined by 5%.
Demand for routes to and from Europe, South America and the Middle East has also been low.
European carriers recorded a 3.6% drop in air cargo rates in June 2019 compared to the same period last year. Relatively high freight volumes in Europe help reduce the impact of weak German exports. Capacity also increased 2.8% year-on-year.
Middle East carriers saw their air cargo volumes drop by 7% in June 2019 compared to the same period last year, along with a 2.7% increase in cargo capacity. Seasonally adjusted levels of demand continue to fall since the end of 2018, and the latest data shows that shipping volumes to Europe (minus 7.2%), and the Asia-Pacific region Pacific (minus 6.5%) in particular.
Latin American airlines recorded a 1.0% drop in air cargo demand in June 2019 compared to the same period last year, while their capacity increased by 4.6%. The significant decrease in air traffic is due to the weakness of the South American market (notably in Brazil and Argentina), where demand (measured in tonnage per kilometer) decreased by 6.5%. Only African airlines posted growth in June 2019, with demand up 3.8% over the same period last year, marking the continent's strongest performance for the fourth consecutive month. Capacity increased by 16.6% year-on-year. According to a report badyzing exceptional performance in Africa and Asia, this growth has increased by 12% in one year.

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