Monday, 7 February 2011

Air Freight Services to Recover in 2010 Reports IATA

Prospects for 2011 forecast trend growth of 5.0-6.0% this year 2010 as a whole was a year of strong recovery in air freight markets. For the full year, air freight was up by an exceptional 20.6%, however, capacity lagged far behind. As a result there was a significant improvement in load factors, with freight load factors up by 5.2% points to 53.8%.

IATA reported that the year-on-year increase for air freight (FTKs) in December was 6.7%, a higher growth rate than the revised 5.8% reported for November. If the reference months are in 2008 then FTKs in December 2010 were one-third more than in December 2008, whereas FTKs in November 2010 were 17.0% above the level reported in November 2008. Just as November might appear to have been an aberration, there is a risk that December could be too.

By December 2010, air freight was 34.0% above its low and, although 5.0% down on early 2010, was still 1.0% above the pre-recession peak level of early 2008. Comparing performance in December to November, air freight traffic increased by 1.5% on a seasonally adjusted basis.

While regional variation in freight growth rates remains particularly marked, it is necessary to put into perspective the relative size of each region and the respective impacts on industry growth rates. In particular, freight traffic carried by Asia Pacific airlines in volume terms is some 4.2 times that carried by the Middle East airlines. In fact, in December, the Asia Pacific Airlines accounted for some 45.0% of FTKs compared with just over 10.0% for the Middle East airlines.

Over the last twelve months, all regions have experienced significant variation in the reported freight growth rates. For the industry overall, the range has been between 5.8% (November 2010) and 35.2% (May 2010); for the Middle East 12.2% (November 2010) and 38.7% (May 2010); Asia Pacific 4.6% (November 2010) and 39.9% (May 2010). The greatest range of almost 60.0% was experienced by the Latin American airlines 3.8% (December 2010) and 63.0% (April 2010). There is an inevitability that reported growth rates will slow as comparisons become more onerous given that in the first half (H1) of 2010, FTKs increased at an average rate of almost 29.0%.

After a period of rapid recovery and then a small decline, freight load factors have settled down at a slightly higher level than before the downturn; yield remains a key driver in minds of airline cargo departments.

Momentum going into 2011 did not appear to be particularly strong. Gains in world trade and a stabilisation of air freight volumes point to a further upward leg to the expansion of goods shipped by air. Prospects for 2011 still seem to be consistent with air freight markets expanding close to trend growth of 5.0-6.0% this year.

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