Political unrest slows global airfreight growth

February demand growth was down significantly from the revised 8.7% expansion recorded in January for cargo traffic.

In addition to the political unrest in the Middle East and North Africa, the more dramatic fall in cargo growth (from 8.7% in January 2011 to 2.3% in February) was impacted in part by factory shutdowns due to the Chinese New Year period in early-February 2011.

IATA’s director general & CEO Giovanni Bisignani pointed out that the earthquake and its aftermath in Japan will most certainly see a further dampening of demand from March.

"The industry fundamentals are good. But extraordinary circumstances have made the first quarter of 2011 very difficult," said Bisignani.

February marked a decline in load factors, which deteriorated to 51.6%, which is 4 percentage points below the peak in May 2010, on a seasonally adjusted basis.

Freight Demand

February airfreight volumes were at the same level as the pre-recession cycle peak in early 2008. But it was down almost 7% on the high reached in May 2010 at the peak of business re-stocking.

The industry’s fundamentals are strong. Business confidence, as measured by the purchasing managers‘ index, reached its second highest level ever in February.

Airfreight carried by Asia-Pacific carriers fell by 4.5% in February, reflecting plant closures associated with the Chinese New Year as well as the impact of inflation-fighting measures in the Chinese economy. In terms of volumes, this had the greatest impact in slowing global growth to 2.3%  –  the weakest growth since the beginning of Q3 2009 when annual growth rates turned positive again out of the recession. Compared with January, freight carried by the region’s carriers fell by 6.6%.

On the back of unrest in Egypt and Tunisia, cargo carried by African carriers fell by 5.7%. In absolute terms, the freight carried by the region’s carriers fell by 8.4% in February compared with January.

North American carriers saw freight expand by 11.8%, second only to the robust 12.1% expansion by Latin American carriers.

European carriers showed weak growth of 6.3%, reflecting the region’s proximity and trade connections with North Africa and the continuing weakness in the European economy.

"The industry situation is volatile and we are watching higher fuel prices carefully," said Bisignani. "Capacity increases ahead of demand are bringing down load factors for both passenger and cargo operations. Demand is still supported by strong economic fundamentals. But with looser supply and demand conditions, it will be a challenge for airlines to recover the added costs of fuel. Our pathetic 1.4% expected margin for 2011 is under considerable pressure."