IATA Report: Air Freight Demand Growth Eases but Remains Robust
The International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), rose 8.5% in April 2017 compared to the year-earlier period. While this was down from the 13.4% year-on-year growth recorded in March 2017, it is well above the average annual growth rate of 3.5% over the past five years. However, growth in freight capacity, measured in available freight tonne kilometers (AFTKs), slowed to 3.9% in April 2017.
IATA suggests that business confidence indicators remain consistently upbeat, suggesting year-on-year FTK growth will remain robust for the rest of the second quarter. However, there are signs that the cyclical growth peak for air cargo has passed, particularly given that the inventory-to-sales ratio stopped falling at the end of last year. Air cargo often sees a boost in demand at the beginning of an economic upturn as companies look to restock inventories quickly. This tapers as inventories are adjusted to new demand levels. Over the whole year, air freight is headed for a healthy growth rate of 7.5%, supported by strong pharmaceuticals and e-commerce.
“Demand eased in April. Growth rates, however, are still much more robust than anything we have seen in the last six years. That’s good news, but it should not be taken as a message that all is well in air cargo. The industry’s antiquated processes need modernization. With e-air waybill utilization topping 50% in April, progress is being made. And we must harness the momentum to drive transformational change across the way the industry operates,” said Alexandre de Juniac, IATA’s Director General and CEO.