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IATA sees weaker demand for air freight

While freight markets were expected to weaken towards year-end, September’s decline was larger than anticipated.
By Patrick Burnson, Executive Editor
October 26, 2010

The International Air Transport Association (IATA) announced International freight traffic recorded a 14.8 percent year-on-year increase, which is significantly weaker than the 19.0 percent rise recorded in August.

While freight markets were expected to weaken towards year-end, September’s decline was larger than anticipated. Consumer and business confidence remains weak in many parts of the world. Re-stocking lifted freight markets earlier in the year, but this has not been followed by spending to solidify the economic recovery. Compared to September 2009, freight capacity has increased by 11.9 percent, below the 14.8 percent increase volumes, pushing cargo load factors to 52.4 percent.

According to Giovanni Bisignani, IATA’s director general and CEO, the freight numbers are “worrying.” Freight activity has fallen 6 percent since May’s post-crisis peak.
“What we see in air cargo markets is inevitably reflected in the broader economy,” he said. As international air cargo accounts for 35 percent of the value of goods traded internationally, it is a leading indicator of economic activity.”

But not everyone in the industry was as alarmed. Brandon Fried, executive director of the Air Forwarders Association, told LM that “sustainable recovery” is the objective.

“And that’s what we are seeing year to date,” he added. “We certainly don’t expect the sudden surges we had for a couple of months in 2010, but our members are telling us that 2011 will be a year of modest but measured growth.”

But on a global level, Bisignani is concerned that “government actions” will have an impact on recovery.

“Austerity measures will dampen demand,” he warned. “When combined with new or increased taxation, as we have seen in Germany and the UK, the challenges are even greater,” said Bisignani. “Governments must understand that air transport is an economic catalyst.”

About the Author

Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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