Daily Management Review

Trade Frictions & Brexit Forces IATA To Almost Halve Air Cargo Traffic Growth Forecast


03/13/2019




Trade spats, a very uncertain Brexit deal, and anti-globalisation rhetoric were cited to the factors that forced the International Air Transport Association (IATA) to almost cut in half its annual forecast for growth in air traffic in the air cargo market. The international body now believes that the growth would be around 2 per cent for the current year.
 
That number is much lower than the earlier estimate of the body of a growth of 3.7 per cent in traffic growth which it had issued in December last year. This cut in forecast means that airlines would not have to depend more on growth in passenger traffic for \their growth in revenues.
 
"Developments in the political climate are not going in our favour," IATA Director General Alexandre de Juniac said at an air cargo conference in Singapore.
 
In January this year, there had been a 1.8 per cent drop in air freight traffic globally primarily because of weaker global economic activity and lowering of consumer confidence.  IATA said last week that the January performance was the worst monthly performance of the global aviation industry in freight revenues in three years.
 
There was 3,5 per cent growth in air cargo traffic in 2018 which was miniscule compared to the extraordinary 9.7 percent growth during 2017 driven by  a re-stocking cycle.
 
Since Asia is now a manufacturing and e-commerce hub, therefore airlines of this region are significantly more dependent on air freight and traffic and the airlines of the region account for nearly 40 per cent of the global market in this segment.
 
In January, there was a drop of 3.6 per cent in cargo demand in Asia, the IATA said last week, which was because of weaker manufacturing conditions for exporters in the region, the trade spat between China and the United States and the slowness in the Chinese economy.
 
Over all cargo demand had been impacted because of slowing export orders despite strong demand of air cargo from e-commerce business, said Association of Asia Pacific Airlines Director General Andrew Herdman.
 
"The first quarter looks weak from a macro-economic outlook but as for the rest of the year it very much depends on whether these trade disputes drag on or whether there are some resolutions," he said in an interview to the media on Monday.
 
During January, a fall in demand for international air cargo was reported by all of the three major airlines of the world and among the top 10 cargo airlines belonging to the Asian region - Cathay Pacific Airways Ltd, Air China Ltd and Singapore Airlines Ltd.
 
"The air cargo industry continues to face challenges from the evolving world trade tensions," Singapore Airlines CEO Goh Choon Phong said on Tuesday. "World trade is at a crossroads given the protectionist stance taken by some parts of the world."
 
Numbers of January are yet to be released by other major Asian cargo carriers.
 
(Source:www.euronews.com)






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