Cargo heads see 'somewhat pessimistic' market

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Cargo heads surveyed by the International Air Transport Association (IATA) see a "somewhat pessimistic" outlook for the air freight market despite signs of improvement in the first half of the year, expecting yields to decline over the next year and a modest increase in traffic, says IATA in its third quarter cargo analysis.

Business confidence is on the decline in China, the US and in Europe, which has led to weakening demand drivers for cargo shipments, says IATA. Intentions for capital spending have also led to the decrease.

"Furthermore, capital investment intentions by Japanese and UK companies has declined and flat inventory to sales ratios indicate businesses have no immediate need for transporting cargo quickly," says IATA.

Demand for air cargo remains soft in the wake of declining consumer confidence and global economic growth of slightly more than 2%, says IATA. Load factors are stable after bottoming out at the end of 2011, while aircraft utilisation is expected to continue to decline, says the association.

Cargo routes within the Middle East saw the largest amount of year-on-year growth in June 2012, at a 22.2% increase. Conversely, North Atlantic routes contracted by 5.3% during the same period, which is an improvement from the 12.3% contraction it saw in May 2012.