Air Cargo Rebounds, But Protectionism Could Clip Growth

Air Cargo Rebounds, But Protectionism Could Clip Growth

Air cargo being loaded on an Emirates plane.Global air cargo surged 4.5 percent in January from a year earlier, driven by solid growth across all regions, but rising protectionism could clip growth, the International Air Transport Association said.

The increase marked a significant acceleration on the 2.2 percent year-on-year growth in December and was well above the 1.4 percent rise in 2013 traffic, the industry body noted.

“The improvement in demand is good news. It is a step up from the mild strengthening that we saw towards the second half of 2013. And in real terms, volumes are similar to the 2010 post-recession peak,” said Tony Tyler, IATA’s director general and CEO.

“But there is also ample reason to be cautious. Protectionist measures are part of the reason for a slower expansion of world trade than we would expect from current levels of industrial production. Companies continue to re-organize supply chains in their efforts to move manufacturing on-shore.”

Air cargo growth vs. capacity growth, January 2014Air cargo growth vs. capacity growth by region, January 2014

Frederick W. Smith, chairman, president and CEO of global transport operator FedEx, sounded a similar note this week in a keynote speech to attendees at the JOC’s 14th annual TPM conference in Long Beach, Calif.

“The problem is not cyclical, it’s systemic, and it’s spreading,” Smith said, observing that “[p]rotectionism squelches competition and lowers economic growth.” He called for a renewed fight against trade barriers that impede global growth.

Growth seen in all regions

Middle Eastern carriers continued to lead the revival, increasing traffic by 10.7 percent in January, followed by resurgent European airlines, which benefited from the continent’s recovery from recession to increase volume 6 percent.

Asia-Pacific airlines, which account for nearly 40 percent of the world market, grew 3.8 percent, overturning a 1 percent contraction in 2013, thanks to improving European and North American demand for Asian manufactured goods.

Latin American carriers’ traffic grew 6.8 percent in January, a marked improvement on the slow growth of 2.3 percent in 2013, but weakness in Brazil, the largest regional economy, could dampen potential through 2014.

North American airlines reported the lowest growth in volume, just 0.7 percent, reflecting subdued business activity during January. But the underlying positive trend in manufacturing in the U.S. should boost exports, IATA predicted.

African carriers kept pace with the global market, with traffic rising 4.1 percent in January, but signs of growth slowing in South Africa and other major regional economies suggest air freight demand could be sluggish over the next few months.

Contact Bruce Barnard at brucebarnard47@hotmail.com.