Following strong 2017 results, global air freight markets posted moderate growth in 2018 amid heightened uncertainties, while passenger markets enjoyed healthy growth although not quite matching the pace of 2017, according to the International Air Transport Association (IATA).
The airfreight market softened in late 2018 but still registered modest growth of 3.5% over the preceding year, significantly lower than the extraordinary 9.7% growth recorded in 2017, figures from IATA showed.
Freight capacity rose by 5.4% in 2018, outpacing annual growth in demand. This exerted downward pressure on the load factor but yields proved resilient, IATA said.
Air cargo’s performance in 2018 was sealed by a softening in demand in December. Year-on-year, December demand decreased by 0.5%, the worst performance since March 2016. Freight capacity, however, grew by 3.8%, making December the tenth month in a row that year-on-year capacity growth outstripped demand growth.
International e-commerce grew in 2018 which was a positive factor for freight for the year. Yet a softening of several key demand drivers was noted, including the ending in early 2018 of the restocking cycle, during which businesses rapidly built up inventories to meet demand.
Other demand drivers that decelerated last year included a weakened global economic activity; a contraction of the export order books of all major exporting nations, except the U.S., in the second half of 2018; and weakened consumer confidence compared to very high levels at the beginning of 2018.
“Air cargo demand lost momentum towards the end of 2018 in the face of weakening global trade, sagging consumer confidence and geopolitical headwinds,” said Alexandre de Juniac, IATA’s director general and CEO.
Looking ahead, he said IATA is cautiously optimistic that demand will grow in the region of 3.7% in 2019. “But with the persistence of trade tensions and protectionist actions by some governments there is significant downside risk. Keeping borders open to people and to trade is critical.”
Airlines in all regions save for Africa reported an annual increase in air cargo demand in 2018.
Asia-Pacific carriers posted the weakest growth of any region in December 2018 with a decrease in demand of 4.5% compared to the same period a year earlier. Capacity increased by 2.6%. The weaker performance in December contributed to growth in freight demand of only 1.7% in 2018 compared to 2017. Annual capacity increased 5.0%.
The weaker performance of Asia-Pacific carriers in 2018 largely reflects a slowing in demand for exports from the region’s major exporters (China, Japan and Korea). Signs of a moderation in economic activity in China and an escalation of trade tensions continue to pose a downside risk to air cargo in Asia-Pacific, IATA said.
Above-trend passenger volume growth
Meanwhile, global passenger demand rose by a healthy 6.5% in 2018 compared to full-year 2017. While lower than the 2017 annual growth of 8.0%, 2018 was another year of above-trend growth, said IATA.
Full-year 2018 capacity climbed 6.1%, and load factor edged up 0.3 percentage point to a record 81.9%, exceeding the previous high set in 2017.
December demand rose 5.3% against the same month in 2017, the slowest year-over-year pace since January 2018 and a continuation of the trend that saw demand growth decelerate to an annualized rate of 5% over the course of the 2018 second half compared to a 9% pace in the first half.
“2018 was another year of strong passenger demand, as aviation continued to support the global economy. We expect similar, if somewhat moderating performance in 2019. Nevertheless, slowing growth in the second half of 2018, coupled with concerns over issues including Brexit and US-China trade tensions, are creating some uncertainty to this positive outlook,” said de Juniac.
International passenger traffic in 2018 climbed 6.3% compared to 2017, down from 8.6% annual growth the year before. Capacity rose 5.7% and load factor climbed by 0.4 percentage point to 81.2%. All regions recorded year-over-year increases in traffic, led by Asia-Pacific. However, North America and Africa were the only two regions to post stronger demand growth in 2018 compared to the prior year’s performance.
Asia-Pacific airlines’ 2018 traffic rose 7.3% compared to 2017, driven by robust regional economic expansion and an increase in route options for travelers. Although this was a slowdown from the 10.5% year-over-year growth recorded in 2017 versus 2016, it was strong enough to lead all the regions for a second consecutive year. Capacity rose 6.4%, and load factor ticked up 0.7 percentage point to 80.6%.
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