Air freight is suffering from the same issues that afflict container shipping, with growing volumes not enough to lift profitability in the face of high fuel prices, weak yields and growing capacity, the International Air Transport Association said in an industry report.

In its Cargo E-Chartbook, IATA said volumes continued to show solid gains on a year ago, supported by economic improvements in some regions, but the high cost of fuel and overall weakness in yields kept cargo financial performance from improving so far this year.

Capacity growth is also an issue. With an expected 14 percent increase in 2014 of deliveries of new twin-aisle aircraft with belly hold capacity, IATA said there could be downward pressure on aircraft utilization ahead.

The airline trade association said emerging Asia trade volumes have rebounded after a weak first quarter and consumers in the U.S. were more optimistic about future economic performance, supporting growth in demand for air-freighted commodities like semi-conductors.

“However, in Europe consumer confidence and trade activity have weakened due to the Russia-Ukraine crisis, which could weaken air freight demand in months ahead. Business confidence continues to point to expansion, but rates of improvements are still weaker than 2013 year-end,” the IATA report stated.

Although jet fuel prices have eased slightly, they remain high at about $120 a barrel. On the positive side, IATA said yields appear to be stabilizing and were up slightly on a year ago, which could reduce downward pressure on financial performance in months ahead. Consistent with more supportive demand conditions in some regions, cargo heads surveyed in July expect growth in traffic and yields to pick-up during the year ahead.

IATA found that traffic volumes were up 4-5 percent on a year ago, but other than a solid rise in July, the trend has been broadly flat throughout 2014. However, stronger economic growth in 2014 has not generated the expansion of international trade that it would have done in the past, as production has been on-shored, partly due to market factors such as rising wages in low cost economies and partly due to a recent rise in protectionist measures.

“Growth ahead could be dampened by trends in production which suggest a shift toward domestic activity,” according to the report.

Demand drivers were mostly positive but recent months have shown diverging developments across regions. In China, consumer confidence remains stable and is improving in the U.S., but European consumers have become more pessimistic over recent months, IATA found. Capital spending intentions of companies in the U.K. and Japan remain positive on balance, but have weakened slightly in Japan compared to the second quarter.

“World trade volumes have recovered after weakness earlier in the year, and that is largely due to a rebound in emerging Asia trade activity. However, there is evidence of weakness in European trade, reflecting the impacts of the Russia-Ukraine crisis,” the report said.

Business confidence continues to signal expansion in manufacturing activity, but rates of improvement still track at a slower pace than those seen toward the end of 2013. There has been no change in inventory to sales ratios suggesting businesses still have no immediate need to reduce their reliance on quick transportation of cargo.

The IATA report said air freight rates were stable but had not improved on a year ago. Demand for Asian goods moved by air remains stable, but with no growth on this key air freight market when compared to the pre-crisis peak. By contrast, sea freight rates were showing some improvement and demand for container shipping has been strongest in the Asia-North America trade.

Contact Greg Knowler atgknowler@joc.comand follow him on Twitter:@greg_knowler.