Global trade wars have weighed so heavily on global and Middle Eastern air freight markets that 2019 was one of the worst years in the sector in the last decade, new data shows.
Air freight volumes last year had their weakest performance since the global financial crisis in 2009, when the market contracted by nearly 10%, according to the International Air Transport Association (IATA).
Full-year data for 2019 for global air freight markets show that demand, measured in freight tonne kilometers (FTKs), fell by 3.3% compared to 2018 while capacity (AFTK) rose by 2.1%. 2019 was the first year of declining freight volumes since 2012.
Middle Eastern carriers’ freight volumes decreased 3.4% year-on-year in December and capacity increased by just 1.9%, the lowest of any region.
This contributed to an annual result of a decline in demand of 4.8% in 2019 – the second greatest decline in growth rate of all the regions.
Annual capacity increased just 0.7%. Disruption to global supply chains and weak global trade, together with airline restructuring in the region, were the chief drivers of the weaker freight outcome, IATA said.
IATA said that air cargo’s performance in 2019 was dampened by weak growth in global trade of just 0.9%. The sector’s underperformance was also due in particular to slowing GDP growth in manufacturing intensive economies.
Softer business and consumer confidence, along with falling export orders, also contributed to air freight struggles.
But there are signs that confidence and orders could pick up in 2020. IATA said it is too early to gauge what long-term effects will be seen from the impact of restrictions associated with combatting the coronavirus outbreak.
Alexandre de Juniac, IATA’s CEO, commented: “Trade tensions are at the root of the worst year for air cargo since the end of the Global Financial Crisis in 2009.
“While these are easing, there is little relief in that good news as we are in unknown territory with respect to the eventual impact of the coronavirus on the global economy.
“With all the restrictions being put in place, it will certainly be a drag on economic growth. And, for sure, 2020 will be another challenging year for the air cargo business.”