News / IATA takes a dim view of growth predictions for air freight in 2017

© Daniil Peshkov

IATA has warned that despite an expected acceleration in the global  economy this year, there remains much uncertainty for the air freight industry.

Air cargo saw freight tonne kilometres (FTKs) grow 3.8% last year, despite 2016 being the first time since the financial crisis that world trade grew slower than GDP (3.4%), at 1.7%.

The IMF believes the slowdown in trade was partly a result of restrictive trade practices.

IATA, in its fourth-quarter cargo chartbook, accounted for some of the growth in air freight by a fall in business inventories compared with sales.

“The faster-than-expected pick-up in demand has led to firms relying more on air cargo to replenish inventories,” it said.

But it warned: “There is significant uncertainty on the scale and timing of the stimulative policy interventions in the US and the extent to which impacts of the planned tax reform, infrastructure spending and regulatory overhaul will materialise in 2017.

“Irrespective of this uncertainty, prospects for the US economy remain favourable, with strong household spending, jobs growth and continued signs of rising nominal wages.”

On the negative side, it added, a strong US dollar could drag down exports and “impacts of US posture, vis-à-vis trade policy, are unclear”.

IATA also revealed that a great deal of payload capacity was in storage – in fact, it amounts to 13% of in-service capacity, above pre-crisis levels of 10.5% in 2007, despite today’s lower fuel prices.

It also noted a “significant increase” in the delivery of freighters in the fourth quarter.

“This may in part be explained by the difficulty faced by airlines to further defer maturing orders on freighter aircraft without having to incur large financial penalties.”

Available freight tonne kilometres grew 5.3% in 2016, outpacing FTK growth. IATA also noted that, on a seasonally adjusted basis, the market was almost 10% above the year-end levels of 2015.

Yields, however, started to fall faster in the second half of the year as low fuel prices continued.

You can read the full report here.