New Data Confirms Persistent Decline In Airfreight Business

There is more confirmation this week that the airfreight business is continuing its yearlong loss in altitude. The news comes at a time when traffic normally picks up as retailers race to get goods to stores for the holiday season.

World ACD, an air cargo research firm, and the International Air Transport Association (IATA) released figures showing a decline in global volume for October that was slightly better than the previous month.

According to World ACD data, airfreight volume, measured by kilos tendered to airlines, shrank 5% compared to the same month in 2018, while the airline trade association reported a 3.5% decrease in demand, measured in freight ton kilometers. IATA previously reported a 4.4% decline for September.

On a seasonally adjusted basis, however, airfreight has remained relatively flat since March, IATA noted on Dec. 4.

Experts attribute the market weakness to a global economic slowdown and the effects of the U.S. trade war with China.

October marks the 12th consecutive month of year-on-year declines in freight volumes. Fall is traditionally considered peak shipping season for freight transport modes but is falling short of normal expectations so far. Some airfreight professionals say they expect a slight improvement for business in December.

World ACD figures show an 11.2% cut in yield to $1.76 per kilogram. The drop in volume and rates resulted in a 16% decrease in revenue for air carriers.

Cargo capacity continued to increase, up 2.2% in October, IATA said, which translated to a 2.8% drop in the load factor (and -3.6% for World ACD).

2019 is lining up to be the worst year for the air cargo industry in a decade. IATA said international freight volumes fell 4% in October, but that is better than the 4.9% drop in September, and several major routes are showing signs of stabilizing.

One bright spot is specialty cargo, which was up 2.7% in October compared to an 8.2% loss for general cargo, according to World ACD. Volumes grew for high-tech goods (13%), pharmaceutical and temperature-controlled goods (8%), and seafood (6%), while the overall perishables market was down 1%.

Of the top-20 origin cities in the world, only two — Guangzhou (+16%) and Shanghai (+3%) — showed a volume increase in October, World ACD reported.

Africa was the only region to show any growth, which IATA attributed to investments from Asia driving demand. Asia-Pacific airlines saw demand for air freight contract by 5.3% in October 2019, compared to the same period in 2018. European airlines posted a 1.5% decrease in freight demand in October 2019 compared to the same period a year earlier.

Experts took some comfort that October export orders, according to the Purchasing Managers Index, had the best result since early 2018, continuing an incremental recovery since March.

Meanwhile, IATA reported a modest slowdown in passenger traffic for October, with growth of 3.4% from a year ago compared to 3.9% growth in September, reflecting the overall soft global economy and sagging business confidence.

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