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Middle Eastern carriers see freight demand expand by 7.7%

Posted 31 May 2016 · Add Comment

The International Air Transport Association (IATA) released demand growth results for global air freight markets for April 2016 showing a 3.2% increase in demand measured in freight tonne kilometers (FTKs) compared to the same period last year.

Yields remained pressured as April freight capacity (measured in available freight tonne kilometers or AFTKs) increased by 6.6% year-on-year.  ​​The increase in demand was broad-based across all regions with the exception of Latin America. The strongest growth occurred in the Middle East and Europe, with April demand up by 7.7% and 6.8%, respectively, compared to the same period last year. 

Middle Eastern carriers saw demand expand b​y 7.7% and capacity rise 11.0% in April 2016 compared to the same period last year. Although carriers in the region continued to report the fastest growth in aggregate, the April growth rate was about half that recorded in April 2015. This reflects both a slowdown in network expansion by the region’s main carriers over the past six months and weak trading conditions. 

While growth appears to be stronger than in the preceding months of 2016, this is largely due to the disappearance from the comparison data of distorting factors associated with the 2015 strike at seaports on the US West Coast.

Overall, the demand for air cargo remains soft and lags behind the relatively robust growth on the passenger side of the business. This is largely driven by weak world trade. The first quarter of 2016 saw the first annual decline in trade volumes since the global financial crisis in 2009, and the World Trade Organization (WTO) predicts only sluggish growth for the remainder of 2016.

“While the April uptick in demand growth for air cargo is encouraging, the overall economic environment is not. The decline in global trade does not bode well for air cargo markets in the months ahead,” said Tony Tyler, IATA’s Director General and CEO.

Asia-Pacific airlines’ demand for air cargo was basically flat with a 0.1% rise in April compared to last year. Capacity expanded 2.8%. The largest factor impacting this stagnation is weak trade—globally and in the region.

North American carriers experienced a significant upward swing in year-on-year performance as the exaggerated effects of last year’s US seaport disruption wore off. Demand grew by 4% in April 2016 compared to the same period last year, significantly better that the 0.8% drop the previous month.

 

European airlines witnessed a 6.8% increase in freight volumes in April 2016, the highest growth since November 2013. The strong European performance corresponds with an increase in export orders in Germany over the last few months. Despite European cargo demand trending upwards, performance remains weak in historical terms. Seasonally adjusted demand in April 2016 was only 1.5% higher than mid-2011. 

 

Latin American airlines reported a decline in demand of 5.9% and a drop in capacity of 0.7%, as economic conditions continued to worsen, particularly in the region’s largest economy, Brazil.

 

African carriers saw flat-line freight growth in April 2016 compared to the same period last year. Notably, on the back of long-haul expansion, the capacity for African airlines surged by 24.3% year-on-year. This is more than double the pace of any other region in recent months.

 

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