The figures released in early February by IATA show that airfreight volumes grew by just over two percent (2.2%) during the past year.
The figures, which are traditionally shown in freight tonne kilometers (FTKs) are quite in contrast to the 5.0% growth figure which was recorded for 2014.
The year (2015) started well with strong volumes but then started to decline throughout the rest of the year.
The IATA figures show that airfreight in the Asia-Pacific area, which accounts for almost 40 percent of traffic, grew by just over two percent.
The European and North American markets showed an almost negligible growth although they accounted for 43% of volumes.
The Middle East remained the thing start with an increase of 11.3% and Africa also gave a modest growth of 1.2%.
Latin America continued in the doldrums and recorded a decline of 6.0% for 2015.
The so-called Freight Load factor (FLF) went down to 44.1%, which was the lowest for some years.
IATA’s departing Director General, Tony Tyler stated that “2015 was another very difficult year for air cargo. Growth has slowed and revenue is falling. In 2011 air cargo revenue peaked at $67 billion. In 2016 we are not expecting revenues to exceed $51 billion.”
Can one predict how 2016 will fare compared to 2015?
Worldwide economic growth is facing one of its heaviest challenges since many years.
This is apparent when looking at the continued (again) air freight rate decline and resulting low yields for many carriers, be they all freighter operators or passenger airlines who are offering more and more long haul belly hold capacity.
Fuel prices have dropped so far that it would be a horror scenario for all carriers if they were to rise 10% - 15% above the present level.
Some of the European airlines are openly complaining about a continued weak South American market and rates eastbound from the USA which are around the US$0.40/kg mark - all in.
Air freight is sandwiched between political tensions and economic woes
The capacity glut and the resulting rate pressure is one issue.
However, more important is whether anyone can gauge how the world’s economy and political situation will be by the middle of this year.
There are too many negative factors which could bring business in some areas to a standstill.
- the continued drop in the Russian economy, the decline of the rouble and no sign of sanctions easing to a point where Russia will be able to get back into the world market. The threat of a type of cold war status between East and West is real
- the Middle East is turning into an uncontrollable fireball with major powers jockeying to keep their political influence there instead of working together to solve the problem.
- Europe it seems is on the best way to total anarchy if there is no common consensus on how to stem and fairly control the flow of refugees. This tragic issue has split the EU apart and there is a real danger that “closed borders” will become a fact. One of the results of this will be a major slowdown on goods within the EU - if there will be an EU in the future.
- South America, as in 2015, will continue to lose ground as an attractive air freight market, whereas Africa will see moderate, but not strong growth.
- and - of course - there’s China. Last year showed us that even a relatively small decline in exports as well as imports, has a major effect of air and sea freight volumes and rates. China will surely readjust further downwards during this year in their economic growth in order to try and balance the country’s financial books.
The list could go on forever, but much of what affects the air freight scene is politically manufactured.
On the face of it, it seems that the world’s politicians are far away from realizing what they are getting us into.
John Mc Donagh