Middle East airlines hit hardest by ongoing trade wars as freight volumes slip

Regional airlines see 6.7% decrease in freight volumes in August as economic and political uncertainty persists
Air freight, Freight, Cargo, Air cargo

Middle East cargo carriers suffered some of the sharpest declines in year-on-year growth in air freight volumes in the summer.

Demand for freight carrying decreased by nearly 4% globally in August, compared to the same period in 2018, according to new data from the International Air Transport Association (IATA).

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It marks the tenth consecutive month of year-on-year decline in freight volumes, the longest period since the global financial crisis in 2008. 

Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 2% year-on-year in August 2019. Capacity growth has now outstripped demand growth for the 16th consecutive month.

Air cargo continues to face strong headwinds from the intensifying trade war between the US and China, as well as weakness in some of the key economic indicators and rising political uncertainties worldwide. Global trade volumes are 1% lower than a year ago, according to the report.

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Trade in emerging countries has been underperforming that of advanced nations throughout most of 2019. This is due to higher sensitivity of the emerging economies to trade tensions, rising political instability and sharp currency depreciation in some of the key emerging markets. 

Airlines in Asia-Pacific and the Middle East suffered the sharpest declines in year-on-year growth in total air freight volumes, while North America and Europe experienced more moderate declines.

Middle Eastern airlines’ freight volumes decreased 6.7% in August 2019 compared to the year-ago period.

This was the sharpest drop in freight demand of any region. Capacity decreased by 0.8%. Escalating trade tensions, the slowing in global trade and airline restructuring have impacted the region’s performance since the fourth quarter of 2018.

Economic uncertainty from oil price volatility among the region’s oil reliant markets has added additional pressure.

Alexandre de Juniac, IATA's CEO, said: “The impact of the US-China trade war on air freight volumes was the clearest yet in August. Year-on-year demand fell by 3.9%. Not since the global financial crisis in 2008 has demand fallen for 10 consecutive months. This is deeply concerning.

“And with no signs of a détente on trade, we can expect the tough business environment for air cargo to continue. Trade generates prosperity. Trade wars don’t. That’s something governments should not forget.”

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