Air Freight Market Analysis – Dec 2015
AIR FREIGHT MARKET ANALYSIS
- Air freight volumes expanded 2.2% in 2015 overall, a slower rate of growth than in 2014. Air freight experienced notable weakness during the first half of 2015, but more recent months’ data show that earlier declines have bottomed out and there has been some modest improvement, consistent with developments in world trade.
- The first chart below shows that air freight volumes declined gradually throughout H1 2015, mainly reflecting weakness in Asia. More recently, however, we have seen international trade stabilize, and FTKs are now higher than the low point in August.
- All the major regions recorded weakness in air freight traffic in 2015. European carriers, for example, recorded a small decline in 2015 overall, contracting 0.1% compared to 2014. Although economic conditions showed some improvement in the Eurozone, trade (mostly exports) was subdued and hampered demand for air freight.
- Asia Pacific airlines saw some expansion in air freight volumes, albeit at a slow rate of 2.3% in 2015 overall. Carriers in the region experienced declines in air freight throughout H1 2015, consistent with significant falls in trade to/from Asia. However, the recent trend in monthly volumes for Asia Pacific airlines suggests that the earlier declines have bottomed out, consistent with a slight pick-up in export growth in some Asian nations.
- Carriers in the Middle East, by contrast, continued to see strong growth in 2015, with expansion of 11.3% compared to 2014. Airlines in this region have benefited from network expansion into emerging markets like Africa, and have been supported by solid growth in local economies, despite some slowdown due to the fall in oil prices.
- Load factors declined in 2015 and during some periods of the year reached lows not seen since 2009. For the year overall, average air freight load factors were 44.1%, compared to 45.7% in 2014. Much of the decline was owing to weakness in demand, but continued growth in capacity also contributed.
- The outlook for air freight and world trade remains fragile, but there are now some more signs that earlier declines in FTKs have bottomed out. Indicators in the Eurozone are looking better and globally, export orders have improved slightly. That said, it is too early to know whether this cautiously positive development will be sustained, as the global economy remains fragile.