Middle Eastern carriers, which include three major Gulf airlines, witnessed a freight volume increase of 3.7 percent (year-on-year) in June 2017, and the capacity, measured in available freight tonne kilometres (AFTKs), increased by 2.2 percent.
According to IATA, which represents some 275 airlines comprising 83 percent of global air traffic, this growth contributed to an increase in demand for cargo in the first half of 2017 of 7.6 percent, well below the 10.8 percent average annual rate seen over the past five years, statistics released by International Air Transport Association (IATA) show.
IATA noted that the slowdown in growth is mainly due to strong competition from carriers in other regions particularly on the Asia-Europe route rather than a significant decrease in demand which has continued to trend upwards at a solid rate of around 10 percent in annualized terms since early 2017. For the first time in 17 yearsthe region’s share of total international freight flown in the first half of 2017 has fallen. Capacity in the region increased by 1.5 percent in the first half of 2017.
The global air freight markets showing that the demand grew by 10.4 percent in the first-half of 2017 compared to the first-half of 2016. This was the strongest first half-year performance since air cargo’s rebound from the Global Financial Crisis in 2010 and nearly triple the industry’s average growth rate of 3.9 percent over the last five years.
While the global freight capacity grew by 3.6 percent in the first half of 2017 compared to the same period in 2016. Demand growth continues to significantly outstrip capacity growth, which is positive for yields.
Air cargo’s strong performance in the first half of 2017 was confirmed by June’s results. Year-on-year demand growth in June increased 11 percent compared to the same year-earlier period. Freight capacity grew by 5.2 percent year-on-year in June.
The sustained growth of air freight demand is consistent with an improvement in global trade, with new global export orders remaining close to a six-year high. However, there are some signs that the cyclical growth period may have peaked.
The global inventory-to-sales ratio has stopped falling. This indicates that the period when companies look to restock inventories quickly, which often gives air cargo a boost, may be nearing an end. Regardless of these developments, the outlook for air freight is optimistic with demand expected to grow at a robust rate of 8 percent during the third quarter of this year.
“Air cargo is flying high on the back of a stronger global economy. Demand is growing at a faster pace than at any time since the Global Financial Crisis. That’s great news after many years of stagnation.
And, even more importantly, the industry is taking advantage of this momentum to accelerate much-needed process modernization and improve the value it provides to its many customers,” said Alexandre de Juniac (pictured), IATA’s Director General and CEO.
All regions experienced positive freight growth in the first half of 2017. Carriers in Asia Pacific and Europe accounted for two-thirds of the increase in demand.
African carriers had the fastest growth in year-on-year freight volumes, up 31.6 percent in June 2017 and a capacity increase of 7.6 percent. This contributed to freight demand growing 25.9 percent in the first half of 2017 – the fastest of all regions. Demand has been boosted by very strong growth on the trade lanes to and from Asia which have increased by nearly 60 percent in the first five months of 2017.
Capacity grew 11.2 percent in the first half of the year. Seasonally adjusted growth has levelled off in recent months; however growth is set to remain in double digits for the remainder of 2017.
