Air freight volumes fell for the 10th consecutive month during August, in what has become the worst run of demand contractions since 2008, according to the latest data from IATA.
Global demand measured in freight tonne kilometres (FTKs) was down some 3.9% year-on-year in August, IATA states in its 9 October report, citing the China-US trade spat and weak economic indicators. Global trade volumes were down 1%, it adds.
But cargo capacity measured in available freight tonne kilometres (AFTKs) was up 2%, marking the 16th consecutive month where that measure has outpaced demand growth.
"The impact of the US-China trade war on air freight volumes was the clearest yet in August," states IATA director general Alexandre de Juniac. "Not since outpaced demand growth.the global financial crisis in 2008 has demand fallen for 10 consecutive months."
Data source: IATA
FTKs stopped rising year-on-year in November 2018 for the first time since March 2016. Demand growth has been in negative territory since then, marking a stark change in fortunes for the sector.
In the year so far, August's FTK decline of 3.9% is steeper than the 3.2% drop seen in July, although it is behind the near-5% falls seen February, April and June.
IATA notes that trade in emerging economies has been "underperforming that of advanced nations throughout most of 2019", citing "higher sensitivity of the emerging economies to trade tensions, rising political instability and sharp currency depreciation in some of the key emerging markets".
Amid the "intensifying" China-US trade war, the global Purchasing Managers Index (PMI) remains in "contraction territory", IATA continues, adding that a fall in orders was reported across "all major trading nations" for the second month in a row.
De Juniac states: "With no signs of a detente on trade, we can expect the tough business environment for air cargo to continue. Trade generates prosperity. Trade wars don’t. That's something governments should not forget."
The biggest year-on-year falls in FTKs during August were seen in Asia-Pacific and the Middle East, while North America and Europe experienced "more moderate declines", IATA says.
Increases in demand were only seen Latin America and Africa, which account for less than 5% of the global market.
The China-US trade spat and the slowdown in China's economy were key factors in the 5% decline in demand among Asia-Pacific carriers in August, IATA states regarding a region that accounts for around 35% of global FTKs. Capacity was up 2.3%.
"The temporary shutdown of Hong Kong International airport – the largest cargo hub in the world – added additional pressure," the industry body says.
Middle East operators saw a 6.7% decline in demand, driven by the global trade situation alongside the impact of oil price volatility and "airline restructuring", IATA states. Carriers in the region – which account for 13% of global demand – saw freight capacity fall 0.8%.
The China-US trade spat was naturally a key factor for North American airlines – which make up 24% of global FTKs – as they reported a 2.4% fall in demand on a 1.3% rise in capacity.
"Freight demand has contracted for the largest routes between Asia and North America, where seasonally adjusted volumes are down almost 5% compared to their level in July 2018," IATA explains.
European operators experienced a 3.3% drop in demand, IATA citing "weaker manufacturing conditions for exporters in Germany, softer regional economies, and ongoing uncertainty over Brexit". The region’s carriers – which account for 23% of global FTKs – saw a 3.3% increase in cargo capacity.
At Latin American carriers, FTKs were up 0.1%, partly weighed down by "political instability" and "volatile currencies". The region, which is responsible for 2.7% of global demand, saw the sharpest fall in capacity, at 2.9%.
African airlines saw an 8% rise in FTKs – albeit the region accounts for only 1.6% of the global industry. Carriers reported a 17.1% rise in capacity amid "strong trade and investment linkages with Asia".