Weaker Asia air freight imports hints at retail electronics slowdown

A WEAKENING in the volume of Asian air freight bound for the US may indicate that purchases of electronics and appliances by US consumers may be slowing after a post-recession spending spree, reports Bloomberg.

It cited the International Air Transport Association (IATA) as saying earlier this month that shipments from Asia to the US increased by 15 per cent in October, less than half the January to June growth rate. Electronics and appliances account for about half of the US Asian imports transported by air.

IATA is also forecasting that global air cargo demand growth may slow to 5.5 per cent in 2011 from 18.5 per cent this year.

The report said that retailers such as Best Buy and Whirlpool have said consumers, whose spending accounts for 70 per cent of the US economy, are "shying away from purchases of big-ticket items."

Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd in New York, said: "Asia freight volumes to the US are slowing, and this raises the risks to the outlook for electronic retail sales here. There may be a little bit of caution still given the unemployment rate is nearly 10 per cent and the consumer is trying to get the debt-laden balance sheets back under control."

Mr Rupkey anticipates that US consumer spending may grow by three per cent in 2011, less than the four per cent predicted by Neal Soss, chief economist at Credit Suisse Holdings USA in New York, and Jim Paulsen, chief investment strategist at Wells Capital Management in Minneapolis.

Sales of electronics declined 0.6 per cent in November, according to US Commerce Department figures. Overall, retail sales gained 0.8 per cent in November after a 1.7 per cent increase in October.

Sales growth of electronics and appliances averaged 2.4 per cent over the past decade in the US.

The report noted that International Priority freight pounds grew by 29 per cent at FedEx in the three months through November, down from gains of about 41 and 68 per cent in the previous two quarters.

UTI Worldwide, an international freight forwarding and logistics company, said that fourth quarter air freight volumes would be about the same as last year after a 20 per cent increase in the third quarter from a year earlier.
(Source:www.schednet.com)