Demand in the Global Air Cargo Supply Chain Remains “Robust”

The International Air Transport Association (IATA) recently released full-year 2017 data for global air freight markets showing that global demand grew by 9.0%. This was more than double the 3.6% annual growth recorded in 2016.

Meanwhile, freight capacity, rose by 3.0% in 2017. This was the slowest annual capacity growth seen since 2012. Demand growth outpaced capacity growth by a factor of three.

“Air cargo had its strongest performance since the rebound from the global financial crisis in 2010,” notes Alexandre de Juniac, IATA’s Director General and CEO.

“We saw improvements in load factors, yields and revenues,” he adds. “Air cargo is still a very tough and competitive business, but the developments in 2017 were the most positive that we have seen in a very long time,”

Air cargo’s strong performance in 2017 was sealed by a solid result in December. Year-on-year demand growth in December increased 5.7%. This was less than half the annual growth rate seen during the middle of 2017 but still well above the five-year average of 4.7%. Freight capacity grew by 3.3% year-on-year in December.

Full-year 2017 demand for air freight grew at twice the pace of the expansion in world trade (4.3%). This outperformance was a result of strong global demand for manufacturing exports as companies moved to restock inventories quickly.

“The outlook for air freight in 2018 is optimistic,” says de Juniac. “Consumer confidence is buoyant. And we see growing strength in international e-commerce and the transport of time- and temperature-sensitive goods such as pharmaceuticals.”

According to de Juniac, the overall pace of growth is expected to slow from the exceptional 9.0% of this year. But he still expects “a very healthy” 4.5% expansion of demand in 2018.

“Challenges remain, including the need for industry-wide evolution to more efficient processes,” he says. “That will help improve customer satisfaction and capture market share as the expectations of shippers and consumers grow ever more demanding.”

Charles W. (Chuck) Clowdis, Jr. Managing Director, Trans-Logistics Group, Inc., made a similar observation, noting that airlines in all regions reported an increase in demand in 2017.

IATA Infographic:

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