Air Freight Growth Slows To 22 Month Low

The growth in international air freight demand has slowed to its lowest rate in almost two years as the restocking cycle ends and global trade softens, IATA reported in its monthly update.

The International Air Transport Association said global demand for air freight grew by 1.7 percent in March, against the previous year. The March 2018 rate was five percentage points lower than February’s increase, and was the slowest rate of growth in 22 months.

IATA said the slowdown was principally due to the end of the restocking cycle, where companies increase inventory to meet higher demand. It said global trade also appears to be softening.

“It's normal that growth slows at the end of a restocking cycle. That clearly has happened. Looking ahead we remain optimistic that air cargo demand will grow by 4-5 percent this year,” IATA director general Alexandre de Juniac said.

He warned of headwinds, saying “Oil prices have risen strongly, and economic growth is patchy. The biggest damage could be political. The implementation of protectionist measures would be an own-goal for all involved - especially the US and China.”

Regionally, Latin America was the only bright spot, with a 15.5 percent increase in freight tonne kms freight traffic. Africa reported results at the other end of the scale with a 3.4 percent contraction in freight demand.

All other regions remained in positive territory, but with softer demand growth.

In addition to Latin America’s jump in demand, the region also reduced freight capacity by 2.1 percent in March, with a resulting 6.0 percent boost in freight load factor to 39.1 percent.

All other regions except North America added more freight capacity than demand, with load factors dropping. Africa pushed 25 percent more freight capacity into the market leading to a freight load factor drop of 6.6 percent to 22.6 percent.