Trade War continues to take a toll on Global Air Cargo demand

Air cargo demand registers 9th consecutive month of year-on-year decline

The ongoing US-China trade war has been causing distress for air cargo industry, according to a data released by The International Air Transport Association (IATA) for global air freight markets, the demand for freight volumes has declined for the 9th consecutive month on the year-on-year basis.

A 3.2% of contraction is seen in July 2019, compared to the same period in 2018 for the air freight demand which is measured in freight tonne-kilometres (FTKs).

The trade war has resulted in a lowering of 1.4% global trade volumes compared to 2018 whereas the trade volumes between the US and China have fallen by 14% year-to-date compared to the same period in 2018.

On the other hand, the freight capacity growth for air cargo has now outpaced the demand growth for the 9th consecutive month. The freight capacity has risen by 2.6% year-on-year in July 2019. It is measured in available freight tonne kilometer (AFTKs).

“Trade tensions are weighing heavily on the entire air cargo industry. Higher tariffs are disrupting not only transpacific supply chains but also worldwide trade lanes. While current tensions might yield short-term political gains, they could lead to long-term negative changes for consumers and the global economy. Trade generates prosperity. It is critical that the US and China work quickly to resolve their differences,” said Alexandre de Juniac, IATA’s Director General and CEO.

Besides, for the first time since February 2009, all major trading nations reported falling orders. Also, the global Purchasing Managers Index (PMI) does not show any improvement. The tracking of new manufacturing export orders has pointed to falling orders since September 2018.

Due to the trade tensions, mainly the airlines in Asia-Pacific and the Middle East have undergone an abrupt fall in year-on-year growth in total air freight volumes in July 2019. The Asia-Pacific airlines have seen a contraction by 4.9% in July 2019, compared to the same period in 2018 for air freight demands.

The Asia-Pacific region accounts for more than 35% of total FTKs. The US-China trade war and weaker manufacturing conditions for exporters in the region have significantly impacted the market.

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