November’s unchanged year-over-year growth was air cargo’s slowest growth rate since March 2016.
IATA named “significant headwinds” contributing to the flat growth. These include weak global economic activity and weakened consumer confidence compared to early 2018. Juniac called trade tensions, such as tariffs, “cause for great concern.”
Trade tensions’ impact on air cargo was particularly evident among Asia-Pacific airlines. Demand for air cargo on these airlines shrank 2.3% year-over-year in November 2018. The airlines still recorded a 3.9% increase for 2018, according to the Association of Asia Pacific Airlines (AAPA), but with a significant slowdown near the end of the year. “Business confidence in the global manufacturing sector weakened in response to trade policy tensions,” AAPA Director General Andrew Herdman said in a statement.
IATA pointed to weak manufacturing conditions, particularly for Chinese exporters, negatively impacting demand. Trade relations with China are top of mind this week, as a Chinese delegation arrives in Washington for trade talks ahead of the scheduled tariff increase on March 2.
On the other hand, airlines could benefit from shippers looking to avoid border congestion and secure timely shipments. Businesses across industries, such as automaker Aston Martin and pharmaceutical company Novo Nordisk, have reportedly announced plans to use air cargo to ship their supplies, anticipating delays through sea or truck travel.
Despite November’s downturn in air freight growth, IATA anticipates FTKs globally to grow 3.9% this year “supported in part by fast-growing areas such as e-commerce,” its analysis said.
(Article first published on supplychaindive.com on January, 28th 2019)