Wednesday, September 6, 2017

Middle East air freight demand up 9.3pc in July

Middle Eastern carriers’ year-on-year freight volumes increased 9.3 per cent in July, up from the 8 per cent jump recorded in June, a recent report showed.

According to data released by the The International Air Transport Association (Iata), seasonally-adjusted international freight volumes have maintained their solid upward trend. However, amid strong competition from other region’s carriers particularly on the Asia-Europe route, the Middle East carriers are not seeing as strong a pickup in the seasonally adjusted traffic trend as other region’s carriers as capacity decreased 0.4 per cent.

African carriers posted the largest year-on-year increase in demand of all regions in July with freight volumes growing 33.7 per cent - the second fastest monthly rise in seven years. Capacity increased by 4.5 per cent over the same time period.

Demand has been boosted by very strong growth on the trade lanes to and from Asia which increased 80 per cent year-on-year in June (latest available data) and by 65 per cent in the first half of the year.

Latin America posted the slowest growth with a 5.8 per cent increase in demand in July.

Global air freight markets showed that demand, measured in freight tonne kilometers (FTKs), increased by 11.4 per cent in July compared to the same period a year ago. This was the fourth time in five months that double-digit annual growth was recorded.

July’s year-on-year increase in demand is nearly four times higher than the 10 year average growth rate of 3.1 per cent.

Freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 3.7 per cent year-on-year in July 2017. Demand growth continues to significantly outstrip capacity growth, which is positive for airline yields and the industry’s financial performance.

The robust growth in air cargo demand is consistent with an uptick in global trade, rising export orders and upbeat business confidence indicators. There are, however, signs that demand growth for air freight may be nearing a peak. Seasonally-adjusted air freight volumes were flat in June and fell in July; and the global inventory-to-sales ratio has stabilised. Air cargo often sees a boost in demand at the beginning of an economic upturn as companies look to restock inventories quickly. This tapers as inventories are adjusted to new demand levels.  

"July was a strong month for air cargo with double-digit growth. And for the third consecutive month demand for air freight grew at a faster pace than demand for air travel. While the outlook for the rest of the year remains positive, there are signs that the cyclical growth period may be nearing a peak," said Alexandre de Juniac, Iata’s director general and CEO. - TradeArabia News Service

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