The global air cargo market produced a strong start to 2018, as traffic increased 8% year-over-year (YOY) in January, up from 5.8% annual growth in December. Per IATA’s January Air Freight Market Analysis, released March 7, global manufacturers continue to report strong demand for their exports, particularly in Asia-Pacific and Europe.

Increased demand is leading to longer supply chain bottlenecks, which can benefit the air cargo industry, IATA senior economist David Oxley said.

“[In the past], periods in which global manufacturing firms have reported longer supplier delivery times have been consistent with rising demand for air cargo,” Oxley said. “Firms have turned to the speed of air freight to help recover some of the lost time out of their production process.”

But January’s air freight growth pace will not likely be the norm in 2018. “We expect demand for air cargo to taper to a more normal 4.5% growth rate for 2018 [and] there are potential headwinds,” IATA director general and CEO Alexandre de Juniac said. “It President Trump follows through on his promise to impose sanctions on aluminum and steel imports, there is a very real risk of a trade war.”

Oxley pointed out that the new orders component of the global manufacturing Purchasing Managers Index (PMI) “is consistent with around 5% FTK growth during the first half of 2018 … in line with the five-year average pace but around half the [9% YOY] growth seen during 2017 as a whole.”

“Moreover, reports suggest that the current bottlenecks in the global supply chain are most acute in capital goods, particularly steel,” Oxley said, a development that could limit potential benefits for air freight carriers.

Total market air freight capacity in January grew 4.2%; which traffic demand growth nearly double that, the overall freight load factor for the month rose 1.5 points YOY to 43.3%. International air freight traffic for African carriers slowed in January but was still the strongest for any region, with 12.9% YOY growth reflecting increased traffic between Africa and Asia.

European international cargo traffic was up 10.6% as manufacturers in the region continued to report robust demand for their exports. International freight traffic in the North Americas and Asia-Pacific regions were up 9.2% and 8.5% respectively, but freight volumes in seasonally adjusted terms are now in line with where they were in mid-2017, IATA said, and have grown minimally.

Latin American airlines’ international air freight growth reached a four-month peak in January, up 8.5%, in response to recent economic recovery in Brazil. Middle Eastern carriers’ international air cargo traffic grew just 4.4% YOY in January, though seasonally adjusted freight volumes in the region are nonetheless trending upward, IATA noted.

Mark Nensel/ATW