Dive Brief:
- Air cargo volumes in January, measured in freight tonne kilometres (FTK), were 1.8% lower than a year earlier. This marked the third straight month of negative YoY growth, according to the International Air Transport Association.
- These numbers are the result of "increasing headwinds to freight demand from the weakness observed in global trade," according to IATA.
- As demand dipped, capacity, measured in available freight tonne kilometres (AFTK), grew by 4%. This is the 11th month in which capacity grew at a faster rate than demand, according to IATA.
Dive Insight:
IATA points out the Purchasing Managers Index (PMI) has been showing decreasing numbers of global export orders since September 2018. Current PMI levels suggest sluggish demand could continue in the near future "and may weaken further in the near-term."
These numbers come as China and the United States continue to debate over the terms of a potential trade agreement. Exports in China were down more than 20% year-over-year in February, according to CNBC. And U.S. exporters are similarly feeling the pinch as they're estimated to have lost some $40 billion a year due to the trade war, according to Industry Week.
Demand for air freight grew in North America in January — up 1.6% from a year ago. Africa also saw an increase in demand at 1.3% YoY growth.
But this growth was offset by other locations. Demand in Asia and the Middle East was down almost 5% from the previous year, and Europe was down 3% YoY. Ongoing trade negotiations are likely to be hurting the Chinese economy; and the uncertainty surrounding Brexit is probably playing a role in the low demand in Europe, IATA said.
"Air cargo markets contracted in January," Alexandre de Juniac, IATA's Director General and CEO said in a statement. "This is a worsening of a weakening trend that started in mid-2018. Unless protectionist measures and trade tensions diminish there is little prospect of a quick re-bound."
