AIR FREIGHT MARKET ANALYSIS

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AIR FREIGHT MARKET ANALYSIS

2017-08-17

Air freight growth posts its strongest first half-year since 2010

  • Global freight tonne kilometres (FTKs) grew by 10.4% year-on-year in H1 2017 – its strongest start in 7 years.
  • Industry drivers continue to indicate that the best of the cyclical growth upturn may now have passed. Nonetheless, the strong upward trend in seasonally adjusted (SA) freight traffic has reasserted itself.
  • African airlines topped the int’l FTK growth chart in H1 2017, alongside robust growth for the major regions.
  • The upward trend in demand has continued to outpace that of capacity, which is supporting the SA load factor. 

The resurgence in air freight demand over the past year or so has been set against a stronger global economic and trade backdrop. This is particularly evident in signs of growing order books for global manufacturers: indeed, the new export orders component of the global purchasing managers’ index (PMI) remains close to a six-year high and crucially above the notional 50-mark that indicates rising orders. In fact, at current levels, the measure is consistent with year-on-year FTK growth remaining robust, in the region of 8%, during Q3 2017. (See Chart 3, overleaf.) More generally, the recent outperformance of air freight relative to wider world trade has also reflected air freight-specific factors, notably the ability of the industry to allow firms to restock quickly at the start of pick-ups in the economic cycle. Indeed, the strong upward trend in industry-wide FTKs has coincided with a sharp decline in the (US) inventory-to-sales ratio between May and December 2016.   

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