IATA sees sharp dip in air freight growth

The International Air Transport Association Wednesday reported that international air cargo growth in May dipped sharply to 1.3 percent, compared to 4.3 percent recorded for the full year 2007.

For the first five months of 2008, air freight volumes were up 2.8 percent. International load factors in May rose slightly for the first time in three months to 74.3 percent on slower capacity growth of 5.4 percent during the month, according the IATA statistics.

The Geneva, Switzerland-based association, which represents some 230 airlines comprising 93 percent of all scheduled international air traffic, said the biggest cause of the May slowdown was a 0.5 percent contraction in Asian carrier traffic due to the impact of the earthquake in China and weakness in the Japanese economy. It added that Asian carriers also saw weakness in transpacific markets with increased competition from U.S. carriers taking advantage of the weak dollar.

North American cargo traffic grew 4.6 percent year on year for May with IATA highlighting that U.S. carriers shifted capacity from domestic to international routes. In addition, IATA said the U.S.-EU open skies agreement created new opportunities for U.S. carriers in Europe. 

IATA said the strong euro is damaging competitiveness for both European exports and the European air cargo business with sluggish year on year growth in May of 1.4 percent.

Latin America freight volumes contracted 13.2 percent as industry restructuring saw the replacement of retiring widebody aircraft with narrow-bodies with limited cargo capacity. 

Africa recorded its 11th month of air freight contraction out of the past 12 months with a fall of 6.5 percent during May as industry restructuring removes freight capacity. 

IATA pointed to the Middle East as the lone bright spot where volumes rose 10.7 percent on the back of oil-based economic growth.

The international freight traffic market shares by region given by IATA in terms of freight ton kilometers (FTKs) are: 

   Asia Pacific, 46.1 percent.

   Europe, 25.9 percent.

   North America, 17.2 percent.

   Middle East, 7.4 percent.

   Latin America, 2.2 percent.

   Africa, 1.1 percent.

   Giovanni Bisignani, IATA's director general and chief executive officer, said the major shifts in traffic flows seen during May reflect how the high price of oil is reshaping the industry. IATA said jet fuel averaged $160 per barrel in May, up 87 percent over the same period last year, while by comparison, crude prices averaged $123 per barrel, an increase of 81 percent.

   Net fuel margins are increasing the impact of skyrocketing oil prices for the aviation industry. Unit costs are up 20 to 30 percent and that is going to take its toll on the bottom line. Efficiency everywhere is the imperative. That must be understood by governments, labor and our industry partners, Bisignani said. 

Source: American Shipper