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Air shipment growth slows in March to its lowest level in 22 months

SDI Logistics Co.,Ltd | Updated: May 07, 2018

THE end of an inventory re-stocking cycle and slowing global trade dragged down air freight growth to its lowest level in 22 months in March, although IATA still forecasts growth will be in the range of four to five per cent this year.

IATA figures show that air cargo traffic measured in freight tonne kilometres (FTKs) rose by 1.7 per cent in March compared to the same month a year earlier, while capacity expanded by 4.4 per cent, marking the first time in 20 months that supply grew ahead of demand.

The total cargo load factor for the month stood at 46.4 per cent, down from 47.6 in March 2017, London's Air Cargo News reported.

Cargo traffic growth over the first three months stood at 5.4 per cent.

Analyst WorldACD also attributed the March slowdown in air cargo volume growth to a slow pick up in the wake of the Chinese Lunar New Year holiday. Weather conditions in Europe and North America were also tough during the month.

WorldACD calculates that cargo volumes rose by 4.8 per cent during the first quarter and by 0.9 per cent in March.

IATA director general Alexandre de Juniac also noted that "oil prices have risen strongly, and economic growth is patchy. The biggest damage could be political. The implementation of protectionist measures would be an own-goal for all involved, especially the US and China."

Looking at regional performance, Asia Pacific carriers recorded March FTK growth of 0.7 per cent compared to the same period a year ago.

"Export orders in Japan and Korea have fallen in recent months and the region remains particularly exposed to the impact of protectionist measures," IATA said.

European airlines' FTKs was up one per cent year on year in March due partially to a stronger euro and a softening of export orders in Germany, IATA said.

North American carriers' freight volumes expanded 3.9 per cent compared to March 2017.

"The US inventory-to-sales ratio has risen in 2018, indicating the boost to cargo growth from restocking is over," explained the association.

Middle East carriers recorded growth of 0.8 per cent in March on a year earlier. This is consistent with the general weakening in regional performance over recent months and may reflect an especially strong March 2017 result.

Latin American was the best performing region with airlines achieving growth of 15.5 per cent in March. This comes as freight volumes in the region have been recovering over the past 18 months due to the better performance of the Brazilian economy.

Finally, African carriers saw cargo traffic declined by 3.4 per cent in March.

"Africa has reported the fastest growth of all regions for 17 of the last 18 months, so it would be premature to suggest this is the start of a negative trend."