Declining trade volumes, as a result of Trump’s disastrous trade war with China (and we suspect very soon with the European Union) have already caused substantial declines in freight volumes in air freight, rail and trucking, while at the end of this month we may see the equally dire consequences of a “no deal Brexit,” never mind a possible UK request for an extension.
Air freight in particular has struggled since 2018, with year-over-year volumes continuing to decline throughout 2019.
Analyst WorldACD said in its latest report that in the eight months from the January through August 2019, “worldwide air cargo volumes were down by almost 5% and yields (in USD) by 7.1% for general cargo, and by 3.8% for special cargo categories.
The Amsterdam-based analyst also noted that “looking strictly at the U.S. dollar-revenues made from air cargo flows between China and the USA, North American carriers suffered more than Asian carriers (-26% vs -17%).
The U.S. airlines and for that matter, the U.S. express operators don’t have to look too far to ascertain the culprit for their woos… their own, close-to-impeachment president in Washington.
Likewise, a gauge of U.S. manufacturing showed the lowest reading in more than 10 years in September as exports dived amid the escalated trade war.
The U.S. manufacturing purchasing managers’ index (PMI) from the Institute for Supply Management came in at 47.8% in September, the lowest since June 2009, marking the second consecutive month of contraction. Any figure below 50% signals a contraction.
The new export orders index was only 41%, the lowest level since March 2009, down from the August reading of 43.3%, ISM data showed.
“We have now tariffed our way into a manufacturing recession in the U.S. and globally,” CNBC quoted Peter Boockvar, chief investment officer at Bleakley Advisory Group as saying.
While Trump’s ill-conceived China policy is likely to endanger his changes of re-election in 2020, analysts - with the above PMI data in mind - are also wondering whether Trump could step back from his trade wars in time to avoid a full-blown recession in the U.S. Most pundits agree that such a move seems highly unlikely.
Air freight is hit by contracting global volumes