Last week IATA released their May 2019 Air Freight Analysis report, stating in seasonal adjusted terms the level of freight tonne kilometres (FTK’s) ticked up modestly for the third consecutive month, suggesting we may be past the low point of this cycle, although the recovery remains tentative at this stage.
The weakness in freight volumes compared with a year ago remains broad-based. As was the case in April, Africa and Latin America contributed positively to industry-wide- on-year- FTK growth result.
From the recent G20 talks it appears that US-China trade relations have thawed somewhat and negotiations will recommence shortly.
This follows the end-June announcement of President Trump cancelling the planned 25% tariff on an additional $300bn worth of Chinese goods.
Airlines have responded to the period of weakness in freight demand partly through reducing capacity in the market. Growth in available freight tonne kilometres (AFTK’s) slowed to just 1.3% in May 2019 compared to May 2018.
While this represents a relatively modest increase, the growth of supply is still around 5 percent points higher than that of demand growth. Consequently, the industry-wide freight load factor maintained the downward trend seen in the last 13 months, and is currently a substantial 2.3% points below its level a year ago.
Asia Pacific & Middle East
Amidst the implementation of a new round of tariffs on US-China trade in mid-May, international FTK’s flown by airlines based in Asia Pacific fell by around 7% year-on-year in May, after a revised 11% decrease in April.
The effect of the US-China trade war has clearly had an impact on the regional growth in Asia Pacific. This is despite evidence suggesting that production lines had shifted within the region to try to counter the adverse effects of the rising trade tensions between China and the US.
North America has seen the weakest outcome since early 2016, with international freight volumes deteriorate by 3.2% year-on-year.
After three consecutive months of international freight growth, Latin America returned to negative year-on-year growth in May. International FTK’s are currently 0.5% below their level of May 2018.
International FTK’s for the European carrier are currently unchanged from their year –ago level. This represents a substantial improvement from an annual decline of 6.7% last month.
Airlines in the smaller Africa international market posted a swift 8.3% growth compared to the same period last year, making Africa the strongest performer on that measure for the 3rd consecutive month.