Trade wars continue to hurt air freight, except in Africa and Latin America

Latin America

The International Air Transport Association (IATA) has reported that the ongoing and deepening trade war between the US and China has continued to drive air freight demand down. Air cargo is measured in terms of freight (metric) ton kilometres (FTKs). (FTKs are the number of metric tons carried multiplied by the number of kilometres travelled.)

The association released its latest data on global air freight markets on Thursday, covering July. Air cargo demand in July 2019 was 3.2% down on the figure for July 2018. This made July the ninth month in a row in which air freight demand was down, year-on-year.

Advertisement

“Trade tensions are weighing heavily on the entire air cargo industry,” highlighted IATA Director General and CEO Alexandre de Juniac. “Higher tariffs are disrupting not only transpacific supply chains but also worldwide trade lanes.”

Global trade fell 1.4%, year-on-year. Trade between the US and China dropped by 14%, also year-on-year. The global Purchasing Managers Index has reported declining orders since September 2018. Moreover, in July 2019, all major trading nations reported declining orders – the first time this had happened since February 2009.

Advertisement

“While current tensions might yield short-term political gains, they could lead to long-term negative changes for consumers and the global economy,” he warned. “Trade generates prosperity. It is critical that the US and China work quickly to resolve their differences.”

There was, however, good news for Africa. African operators saw their demand increase in July, by 10.9% year-on-year. They have been enjoying an upward trend in FTKs since the middle of last year, and July was the sixth month in succession that Africa was IATA’s strongest performing region. Strong trade and investment connections with Asia were the main factor in this demand growth. African air freight capacity increased by 17%.

The only other region to show FTK growth was Latin America, up 3%, largely due to the recovery of the Brazilian economy. (Latin American capacity rose 2.7%.) But Africa accounted for only 1.6% of the global air cargo market and Latin America for 2.7%.

The biggest region was Asia-Pacific, with a 35.4% share of global FTKs; it registered a 4.9% fall in July, year-on-year. North America, in second place with 23.8% of global FTKs, saw a decline of 2.1%. Europe, ranked third with 23.3% of global demand, experienced a fall of 2%. In fourth place was the Middle East, at 13.2%, and which suffered a 5.5% drop in demand. 

Leave a Reply