Air cargo: More downward pressure on Asia-Pacific demand, says IATA

Patrick Burnson, Executive Editor -- Logistics Management, 10/1/2008

WASHINGTON—In what will come as small surprise to most U.S. shippers, the International Air Transport Association (IATA) released data yesterday indicating a continuing decline in demand for capacity. The situation was even more pronounced in the Asia-Pacific trade lane.

 “The contrast between the first half of the year and the last two months is stark,” said Giovanni Bisignani, IATA’s director general and CEO, in a statement. “The slowdown has been so sudden that airlines can’t adjust capacity quickly enough. While the drop in the oil price is welcome relief on the cost side, fuel remains 30 percent higher than a year ago. And with traffic growth continuing to decline, the industry is still heading for a $5.2 billion loss this year.”

 According to IATA, air freight has declined for the past three months, led by Asia Pacific carriers that posted a 6.5 percent decline in July and a 6.8 percent decline in August.

 “Airlines carry 35 percent by value of the goods traded internationally,” said Bisignani “The three-month decline—led by weakness in Asia-Pacific markets—is a clear indication that global trade is slowing down. This shows that the impact of the financial crisis is broad geographically and will worsen before it gets better.”

 In Washington, air cargo specialists were more circumspect.

 “We see this as more of a flattening in demand, rather than a downward spiral,” said Brandon Fried, executive director of the Air Forwarders Association. “While Japan Airlines pulled some planes recently, we have not seen the same action taken by other leading Asian carriers.”

 Still, Asia Pacific carriers reported a 3.1 percent contraction, said IATA, following a 0.5 percent decline in July.

 “Economic distortions surrounding the Olympics in China and a weakening Japanese economic outlook contributed to the decline,” said IATA spokesmen. “While some recovery in this weak performance is expected in coming months, clearly the region’s economies are feeling the impact of the turmoil in the financial markets.”