IATA blames U.S.-China trade war for continued contraction of freight market demand

The International Air Transport Association (IATA) has released global air freight market data for August, revealing that there has been a further retraction for the tenth consecutive month of year-on-year decline, something not witnessed since the 2008 financial crisis.

Freight ton kilometres (FTKs) dropped 3.9% for the month, available freight ton kilometers (AFTKs) rose 2% year-on-year and capacity growth outstripped demand growth for the 16^th consecutive month, though global trade volumes are 1% down. According to IATA’s release: “Global export orders continue to fall. The global Purchasing Managers Index (PMI) remains in contraction territory. Its tracking of new manufacturing export orders has pointed to falling orders since September 2018. And for the second month in a row, all major trading nations reported falling orders.” Commenting on the August results, Alexandre de Juniac, IATA Director General and CEO said: “The impact of the US-China trade war on air freight volumes was the clearest yet in August. Year-on-year demand fell by 3.9%. Not since the global financial crisis in 2008 has demand fallen for 10 consecutive months. This is deeply concerning. And with no signs of a détente on trade, we can expect the tough business environment for air cargo to continue. Trade generates prosperity. Trade wars don’t. That’s something governments should not forget.”

Asia-Pacific airlines saw demand for air freight contract by 5% compared to August 2018. The US-China trade war, the slowdown in the Chinese economy, the temporary shutdown of Hong Kong International Airport combined have had a massive impact on global figures with the region accounting for more than 35% of total FTKs. Air freight capacity increased by 2.3% over the past year. North American airlines saw demand decrease by 2.4% in August 2019, compared to the same period a year earlier. Capacity increased by 1.3%. Freight demand has contracted for the largest routes between Asia and North America, where seasonally adjusted volumes are down almost 5% compared to their level in July 2018. European airlines posted a 3.3% decrease in freight demand in August 2019 compared to the same period a year earlier. Capacity increased by 3.3% year-on-year. Middle Eastern airlines’ freight volumes decreased 6.7% in August compared to the year-ago period. This was the sharpest drop in freight demand of any region. Capacity decreased by 0.8%. Latin American airlines experienced an increase in freight demand in August 2019 of 0.1% compared to the same period last year and a capacity decrease of 2.9%. African carriers posted the fastest growth of any region in August 2019, with an increase in demand of 8% compared to August 2018. Capacity grew 17.1% year-on-year.