IATA notes continued stagnant cargo demand

According to the International Air Transport Association (IATA), cargo demand remains largely stagnant. Airlines are expected to have carried 51.6 million tonnes of cargo in 2013, a figure likely to increase to 52.5 million tonnes in 2014. This modest increase in demand is expected to be offset by a decline in yields (forecast to fall 2.1% in 2014).

Despite the stagnation in the air cargo industry, IATA notes that belly hold capacity continues to be introduced as airlines seek to benefit from robust passenger demand. Cargo revenues are expected to be $60 billion in both 2013 and 2014.

While revenues peaked in 2011 at $67 billion, for 2013 and 2014 they are predicted to remain basically unchanged from 2007 levels. The on-shoring of production is having an adverse impact on the cargo business, IATA explains. The process of on-shoring is being driven by two forces, it notes. Since the recession, there has been a rise in protectionist measures by governments aiming to stimulate domestic economies. In tandem, the effects of earlier liberalisation are fading as costs rise in previously low labour cost locations. These conditions are likely to extend over several years.

However, the World Trade Organization’s Bali agreement to liberalise markets and improve trade facilitation is expected to be good news for the air cargo industry, the association considers.

“Removing the red tape that restricts and slows trade is a positive goal. It aligns well with our own efforts to bring efficiency to air cargo through e-Freight,” observes IATA Director General and CEO, Tony Tyler. Preliminary figures released by the International Civil Aviation Organization (ICAO) for 2013 confirm that cargo traffic as expressed in freight tonne-kilometres (FTK) increased by about 1% year-on-year.

Asia Pacific airlines will account for the largest share of global FTKs flown, but they will see a contraction in overall freight volumes similar to that experienced by North American carriers. The Middle East will have had the fastest air cargo traffic growth compared to 2012, accounting for 12 per cent of global FTK flown.