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GLOBAL CARGO DEMAND SLOW

ME air freight volumes up 28pc in Aug

Geneva, October 1, 2013

Middle Eastern carriers put up a solid performance in August registering a 28 per cent growth in its year-on-year freight volumes compared to the year before, while the global air cargo market continued its low gear acceleration, said a report.

Announcing the results for August, the International Air Transport Association (IATA) said continuing their strong growth that has been characteristic for the region all year, the Middle Eastern airlines posted a 12.7 per cent year-to-date growth for the period.

The IATA reported a continued modest improvement in air cargo markets in August with the global air freight demand up 3.6 per cent on the previous year. That is considerably better than year-to-date performance of a 0.7 per cent expansion.

The demand for air freight began increasing slowly from April, in line with strengthening business confidence, as economic performance in Europe and the US showed signs of improvement, said the global aviation body in its monthly report.

The Eurozone economy, for example, stabilized in the second quarter and import volumes have also improved. A strong upswing, however, would require a significant improvement in the cargo performance of airlines in the Asia-Pacific region, it stated.

They are the largest players in global air cargo with a collective 38 per cent market share. Their year-on-year performance for August was basically flat (-0.2 per cent), it added.

Commenting on the growth, IATA director general and CEO Tony Tyler said: "There are some signs of improvement in demand, but the air freight business remains very tough. Freight volumes are only now reaching the levels of 2011 when the cargo business peaked with revenues of $67 billion."

"This year we expect $59 billion of revenues from air cargo globally. That takes the topline back to 2007 levels. But to earn that revenue, we will be moving nearly 17 per cent more cargo and dealing with a 40 per cent hike in jet fuel. The road ahead will be challenging," he stated.

According to Tyler, the bulk of the August growth came from carriers in Europe and the Middle East, while Asia-Pacific volumes were stagnant and African volumes fell significantly.

In August, the year-on-year freight volumes for the Middle Eastern carriers rose 23.8 per cent, though this was exaggerated by the impact of Ramadan, which fell a month earlier this year, said IATA in its report.

It appears Middle Eastern freight growth has accelerated in recent months (even when neutralizing for the impact of Ramadan). This has been supported by improving demand in developed economies.

Their strategic location and efficient hub connections are making them a growing competitor for air freight between Asia’s manufacturing centers and European consumers, for example, the report stated.

Asia-Pacific airlines’ freight demand was basically flat (-0.2 per cent) compared to the previous August. That is an improvement on the year-to-date performance which showed a 1.9 per cent decline.

The “flatline” performance of the region’s carriers can be largely attributed to a slowdown in emerging markets and a deceleration of China’s growth over the first half of the year, said the aviation body.

A rebound in trade growth from July (in response to the strength of developed markets) could be an encouraging sign. However the region’s carriers will be facing stiffer competition for long-haul cargo. Airlines based in the Middle East, for example, have expanded their cargo business significantly (12.7 per cent year-to-date), said the report.

European carriers’ freight grew 3.4 per cent in August, with capacity up 4.2 per cent. The European economy has started growing again and imports have increased. Eurozone export orders reached a 27-month high in August which should lead to strong export growth in the months ahead.

North American airlines showed signs of a small pick-up, with growth of 0.7 per cent. There has been considerable volatility in North American freight performance in 2013. Year-to-date, North American carriers have seen cargo demand slip by 1.2 per cent, said the IATA.

Latin American airlines grew their freight volumes strongly, up 12.6 per cent in August. Robust trade volumes in Latin America (up nearly 8 per cent in July since the start of the year) are providing a solid foundation for expansion in air freight demand.

According to Tyler, African carriers experienced another decline in freight volumes, down 9.7 per cent. "After a positive start to 2013, African air freight growth has slowed and is now up by just 0.7 per cent for the year to date. Despite healthy trade volumes and strong growth in many African countries, African airlines face intense competition on key trade routes," he added.-TradeArabia News Service




Tags: Middle East | Iata | freight | air cargo |

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