Global Air Freight Just Suffered Worst Year Since 2009

The International Air Transport Association (IATA) published a new report on Wednesday that showed global air freight markets declined in 2019, suggesting the global economy continues to decelerate. 

Global air freight measured in freight tonne kilometers (FTKs), plunged 3.3% in 2019 over the prior year while available freight tonne-kilometers (AFTK) rose 2.1%. 

IATA warned this was the first year of contracting freight volumes since 2012, and the slowest growth in the industry since 2009. 

Cargo volumes dropped in December by 2.7 Y/Y, while capacity rose 2.8%. 

The performance of air cargo is a reflection of a global synchronized slowdown that continues to deepen. Slowing GDP growth across major manufacturing-intensive economies has dented consumer confidence, led to falling export orders, and, in return, has hurt the air freight industry.

IATA said there are some signs that orders could bounce in 2020. It warned that a slowing global economy and coronavirus outbreak in Asia could lead to turbulence in 1H20.

"Trade tensions are at the root of the worst year for air cargo since the end of the Global Financial Crisis in 2009. While these are easing, there is little relief in that good news as we are in unknown territory with respect to the eventual impact of the coronavirus on the global economy. With all the restrictions being put in place, it will certainly be a drag on economic growth. And, for sure, 2020 will be another challenging year for the air cargo business," said Alexandre de Juniac, IATA's Director General and CEO.

Here's IATA's Regional Performance Report: 

All markets except Africa suffered volume declines in 2019. Asia-Pacific retained the largest share of FTKs, at 34.6 percent. The share of freight traffic increased modestly for both North America and Europe, to 24.2 percent and 23.7 percent, respectively. Middle East carriers' traffic share held steady at 13 percent. Africa and Latin America saw their shares lift marginally, to 1.8 percent and 2.8 percent.

Asia-Pacific carriers in December posted a decrease in demand of 3.5 percent compared to the same period a year earlier. Capacity increased by 2.8 percent. The full-year 2019 saw volumes decline 5.7 percent, the largest decrease of any region, while capacity increased by 1.1 percent. As the world's main manufacturing region, international trade tensions and the global growth slowdown weighed heavily on regional air freight volumes in 2019. Within-Asia FTKs were particularly affected (down 8 percent compared to a year ago).

North American airlines saw volumes fall by 3.4 percent in December, while capacity grew by 2.1 percent. For 2019 in total, the region's cargo volumes declined by 1.5 percent, compared to a capacity increase of 1.6 percent. Trade tensions and cooling US economic activity in the latter part of the year have been factors in the decline. The 5.6 percent fall in international year-on-year volumes in December was the weakest monthly growth outcome for the region since early 2016.

European airlines experienced a 1.1 percent year-on-year decrease in freight demand in December, with a capacity rise of 4.9 percent. The fall in December was typical of the performance for 2019 as a whole, where volumes fell 1.8 percent, but capacity increased by 3.4 percent. Softer activity, including in the manufacturing-intensive German economy, combined with ongoing Brexit uncertainty, contributed to the 2019 result, which in international freight volume terms was the weakest since 2012.

Middle Eastern carriers' freight volumes decreased 3.4 percent year-on-year in December and capacity increased by just 1.9 percent, the lowest of any region. This contributed to an annual result of a decline in demand of 4.8 percent in 2019 – the second greatest decline in growth rate of all the regions. Annual capacity increased just 0.7 percent. Disruption to global supply chains and weak global trade, together with airline restructuring in the region, were the chief drivers of the weaker freight outcome.

Latin American airlines suffered the sharpest fall in demand of any region in December, of 5.3 percent. The region was also the only one to see a reduction in capacity (-3.1 percent). Although the region was the second strongest performer across 2019 as a whole, limiting its decline in volumes to just 0.4 percent, social unrest and economic difficulties in several key countries led to the weakest international FTK outcome since 2015. Annual capacity increased 4.7 percent.

African carriers' saw freight demand increase by 10.3 percent in December 2019, compared to the same month in 2018. This was reflected in the strong 2019 full-year performance, which saw Africa freight volumes expand 7.4 percent. Capacity in December grew by 10 percent and for 2019 in total, increased by 13.3 percent. Over the year, air cargo volumes have been supported by strong capacity growth and investment linkages with Asia.