Global air freight demand grew by 2% in September from the year-earlier period, flat from August, but less than half the five-year average growth rate of 5.1%. Although capacity growth, at 3.2% year-over-year (YOY), has outstripped demand for the past seven months in a row, yields appear to be holding up, according to data from IATA’s Air Freight Market Analysis released Nov. 5.

The weaker growth, which is being buoyed by strong consumer confidence and growth in international e-commerce, is consistent with the typical pattern seen after inventory led-upturns in the past. Seasonally adjusted freight volumes have grown at an annualized rate of 4.1% over the past six months, a solid pace by historical standards.

The sector is, however, being weighed down by a softening in key demand drivers. Manufacturers’ order books are no longer rising, and the new export orders component of the global manufacturing Purchasing Managers’ Index (PMI) fell into contraction territory in October for the first time since June 2016. Manufacturers in Asia and Europe are also reporting longer supplier delivery times, further undercutting the need for air freight.

IATA DG and CEO Alexandre de Juniac, acknowledging the softer demand for September, said the “bigger message” for the cargo sector is the “need to modernize processes.” He said progress toward adoption of the e-air waybill (e-AWB) has been promising, but added there is much more that “must be done by governments and the supply chain to bring air cargo processes into the modern era.”

All regions reported YOY FTK growth in September, besides Africa, which remained in negative territory for the sixth time in seven months. International freight demand was 1.2% for Asia-Pacific airlines, a slight decrease from August, on weaker manufacturing conditions for exporters and disruption from typhoon activity. Middle Eastern carriers posted the strongest growth by far at 6.6%, up from 1.4% in the previously month.

In North America, where freight demand has been supported for the past year by solid consumer spending and the strength of the US economy, airlines experienced a sharp seasonally-adjusted month-on-month decline in international FTKs, more than halving from 3.1% in August to a 28-month low of 1.5% in September. The same trend was on display in Europe, where international FTKs fell to a 30-month low of 1.2% from 3.4% in the previous month, after having trended upward over the past six months.

Ben Goldstein,