International Air Transport Association (IATA) released full-year air cargo data for 2014 showing 4.5 per cent demand growth compared to 2013 measured by freight tonne kilometers (FTKs). That is a significant acceleration from the 1.4 per cent recorded in 2013 over 2012.
Air cargo market expansion gathered momentum as 2014 progressed. The year finished on a positive note, with growth in December accelerating to 4.9 per cent, compared to December 2013. The vast majority of the growth in 2014, however, was in the Asia-Pacific and Middle East regions, which respectively contributed 46 and 29 per cent of the expansion in FTKs. Growth was recorded in all other regions, but was particularly weak in Latin America.
“After several years of stagnation, the air cargo business is growing again. This is largely being driven by the uptick in world trade over the second half of 2014. Recent concerns over the health of the global economy and a corresponding fall in business confidence have not yet impacted air cargo. But it is a downside risk that will need to be watched carefully as we move through 2015,” said Tony Tyler, IATA’s Director General and CEO.
Performance varied widely by region with the most significant growth being recorded by airlines in Asia-Pacific and the Middle East. All regions, with the exception of Latin America, reported a strengthening of demand in December.
• Asia-Pacific carriers grew 5.9 per cent in December compared to December 2013, and 5.4 per cent for 2014 as a whole. Volumes have benefitted from increasing import demand in addition to continuing manufacturing strength. Japanese and Chinese markets were particularly important contributors. Overall in 2014, capacity expanded 5.7 per cent leading to a slight fall in load factor to 55.4 per cent, although this remains the strongest load factor of any region.
• North American airlines reported demand growth of 2.8 per cent in December and 2.4 per cent for 2014 as a whole. After a slow, weather-affected start to the year, growth accelerated, driven by import and export demand. Carriers in the region cut back capacity in 2014 by 0.5 per cent, helping to underpin the load factor (35.3 per cent).
• European airlines saw FTKs expand 2.3 per cent in December, and by 2.0 per cent in 2014 overall. The Eurozone remains weak and close to recession, with the effects of Russian sanctions also having an impact. Load factors also fell in 2014 as capacity expanded 3.0 per cent.
• Middle Eastern carriers enjoyed the strongest growth of any region, expanding 11.3 per cent in December and 11.0 per cent for the year as a whole. Airlines in the region have extended their networks and grown capacity by 11.1 per cent to make the Middle East a hub for freight traffic. In fact they have been responsible for over 37 per cent of the total increase in global freight capacity in 2014.
Cargo innovation in Shanghai
“Despite the improving growth trend, big challenges remain. Yields declined for the third straight year in 2014, with no immediate prospect of improvement. Cargo revenues remained basically unchanged at $62 billion, some $5 billion below their 2011 peak. To move forward, the industry is focusing on providing a stronger value proposition to meet evolving customer needs. That’s what is driving efforts such as cutting shipping times, ensuring high-quality handling of temperature-sensitive goods, or benchmarking quality to improve customer transparency. It’s all about delivering value as a supply chain with a strong vision of the future,” said Tyler.
This focus on value is delivering change. For example, in 2014 electronic air waybill penetration reached 22 per cent and airlines are targeting 45 per cent penetration by the end of 2015. An initiative to encourage further industry innovations will take center stage at the World Cargo Symposium in Shanghai on March 10-12 with the launch of the Air Cargo Innovation Awards. “If you have a stake in air cargo, the World Cargo Symposium is the place to be in March as we lay the foundations to energize the sector, recapture market share and grow revenues,” said Tyler.