Air freight volumes point to a continued slowdown in global trade

Andy Jacobsohn/Getty Images

  • Global air freight volumes grew at the slowest annual pace in more than two years in July.
  • IATA says new export order data points to growth in air freight slowing further.
  • The group says much depends on whether “potential headwinds from protectionism can be counteracted by opportunities from fast-growing areas such as e-commerce”.

Global air freight volumes grew at the slowest annual pace in more than two years in July, adding to evidence of a slowdown in global trade flows.

According to the International Air Transport Association (IATA), freight tonne kilometres (FTKs) — simply the weight of volume transported multiplied by distance travelled — grew by just 2.1% in the year to July in seasonally adjusted terms, the smallest increase since May 2016.

The result continued the gradual deceleration in air freight volumes seen this year, and below the average level of 5.1% seen over the past five years.

IATA

“The moderation in the seasonally adjusted FTK trend mainly reflects the fact that the inventory restocking cycle — which underpinned the strong period of growth in 2016 and early 2017 — has largely run its course,” IATA said.

“Reduced momentum in air freight demand has also been consistent with ongoing signs of a broad-based weakening in manufacturing firms’ export order books since the start of 2018.

“The new export orders component of the manufacturing Purchasing Managers’ Index (PMI) climbed back into positive territory in the US in August, but the picture is less positive in Asia and Europe.”

IATA, IHS Markit

IATA expects the moderation in FTK growth will likely continue in the months ahead.

However, given the fluid nature of trade negotiations currently under way between the United States and other major trading partners, it admits there’s a high degree of uncertainty towards its forecast.

“The new export orders component of the global PMI is now just above the 50-mark that corresponds to rising export orders. At current levels, the indicator suggests that annual FTK growth could slow further over the coming months,” it says.

“More generally, the broader question is how strong the structural backdrop for air freight growth will be going into 2019.

“This will depend in large part on the extent that potential headwinds from protectionism can be counteracted by opportunities from fast-growing areas such as e-commerce.”

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