The quickest way to transport cargo around the world is through aviation and this is a gigantic industry. There are a number of cargo hubs all over the world which are key airports for transporting cargo, but is air cargo demand in decline? Despite the fact that this is a huge and global industry it is one which is struggling in 2019.
Zero Growth Predicted
It has been predicted by The International Air Transport Association (IATA) that there will be zero growth in global air freight after a decline in volumes in the first few months of the year. It was originally thought that 2019 would bring about growth of around 3.7% after 9.7% growth in 2017 and 3.4% in 2018. So, what is the cause of this decline?
International trade tensions largely between the US and China have contributed to a decline in new export orders and cargo air charter. Additionally, the uncertainty over Brexit and Europe has only made matters worse and affected all areas of the world. With cost inputs rising and a lack of confidence due to trade tensions, global trade has plummeted and it seems unlikely to pick up anytime soon.
Airlines are having to adjust their capacity growth to fall in line with the current dip that is being seen in global trade which is creating difficulties for cargo businesses. Asia-Pacific, Europe and the Middle East have suffered the sharpest declines whilst there were very small increases in North America, Latin America and Africa in April of 2019.
Optimism for Asia-Pacific
Despite the worrying forecast, there is some optimism from the IATA particularly when it comes to the Asia-Pacific. This is due to the growing populations and strong manufacturing hubs in places like Vietnam and Thailand which gives air cargo a boost in the region. Additionally, the growth of the middle class in Asia will help support various industries and drive more air cargo movement in the region.
No Quick Fix
While this is positive news, there will be no quick rebound on a global scale with so much uncertainty still in the air and no signs of trade tensions easing anytime soon and things could get worse before they get better. Air cargo volumes have also been worse in 2019 due to the timing of Chinese and New Year but it is clear that there is a trend developing with export orders only increasing month on month 3 times in the last 15 months.
It is amazing the impact that global issues have had on the air freight industry particularly when you look at the large growth seen in 2017. Air freight is now in decline with tensions increasing across the globe and it may be some time until the industry starts to thrive once again.