Air cargo markets showed flat performance year-over-year in May and a sharp decline in load factors in light of new capacity, a new analysis from the IATA shows.
Global freight tonne kilometres grew only 0.8% year-over-year in May, yet capacity across the world's cargo markets increased 2.1%. This boost in capacity caused load factors to drop to 44.9%, which is the lowest level the industry has seen since recovering from the economic downturn of 2008, the IATA says.
The growing number of passenger aircraft with belly space for cargo is causing challenges for air freight operators, says the IATA.
"As about 60% of global air cargo utilizes capacity in the belly of passenger aircraft, managing capacity at a time when growth in air travel is outpacing that of cargo is particularly challenging," says the association.
Softening demand in emerging economies like China is causing the cargo market to stall despite growth in the Middle East and improvements in Europe, says the IATA.
While the industry had been hopeful about the cargo market seeing improving demands and yields at the end of 2012, these signs have not developed into a sustained trend of positive growth since then.
"It is now clear that the positive global upswing in air cargo at the end of 2012 was an illusion," says Tony Tyler, the IATA's director general and chief executive. "Air cargo, along with many parts of the world economy, appears to be in suspended animation at the moment," he says.
While business confidence is increasing in Europe and the Middle East saw 9.7% growth in air cargo demand in May, much of these improvements are being offset by weaknesses in most other markets. Cargo volumes fell in the Asia-Pacific region by 0.5% with a capacity increase of 0.3% in May, and the North American market saw a 1.2% decrease in demand. Africa saw a 0.2% increase in cargo volumes in May, but the IATA says the trend for growth in the region is positive considering the demand for goods in the region.
Latin American carriers saw a 0.1% drop in volumes in May, but the IATA says it expects to see the market improve in the next few months.
Boeing told Flightglobal in June that it is optimistic that global trade will improve in the back half of 2013, therefore curbing weakness in the cargo market. The airframer cut annual production of its Boeing 747-8 freighter by 13% in light of this weakness, but said it expects deliveries to pick up again as conditions improve.