The expression, “It’s an ill wind that blows nobody good” may be invoked here when it comes to examining the collapse of the ocean container shipping giant Hanjin at the end of August.
According to IATA analyst David Oxley air cargo carriers have a few reasons for some optimism in the near term.
“There is the potential for shippers to turn to air cargo during the peak season of product launches and deliveries of new product lines,” notes Oxley. “This may provide a ‘one-off' boost to the air mode similar to that seen during the disruption at seaports on the US west coast in early 2015.”
The uptick in the new export orders component of the global purchasing managers' index back into expansionary territory in recent months also offers some encouragement for air freight over the months ahead, adds Oxley.
“But crucially, any boost in the near term is likely to prove transitory,” he adds. “The bigger picture is that the ongoing sluggishness of global trade conditions continues to present a stiff headwind for air freight.”
This note of caution is also echoed in recent data compiled by the CPB Netherlands Bureau for Economic Policy Analysis – part of the Ministry of Economic Affairs. Analysts there say that world trade volumes fell by 1.1% month-on-month in July, and contracted in year-on-year terms for only the second time since the end of 2009.
“Global trade growth has lagged behind that seen in industrial production so far this year – a far cry from the trend before the global financial crisis when global trade tended to grow around twice as fast as output,” say CPB economists.
IATA's analyst, Oxley, adds that while there is no mechanistic link between air freight and world trade, the industry is prone to periods of under and over performance relative to global trade volumes, mainly reflecting the narrow product mix transported by air.
“But in the current political environment, any new impetus to reinvigorate the stagnation in world trade volumes looks unlikely,” he says. “Furthermore, taking political rhetoric at face value, the future of even existing free-trade arrangements appears under threat.”
The upshot is that the tailwinds that used to propel global trade and air cargo volumes are likely to be much weaker in the future than they were in the past, IATA concludes. Such a backdrop points to continuation of just modest and fitful growth in air freight volumes in the years ahead, rather than a sustained return to the 5-6% growth rates of old.
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