Airfreight at a turning point?

Courtesy of Eyefortransport
The International Air Transport Association has announced international traffic results for October, showing a 14.4% year-on-year increase for international freight.

According to IATA’s director general & CEO Giovanni Bisignani, growth is returning to a more normal pattern, with freight demand 1% above pre-crisis levels of early-2008.

“Where we go from here is dependant on developments in the global economy,” said Bisignani. “The US is spending more to boost its economy. Asia outside of Japan is barrelling forward with high-speed growth. And Europe is tightening its belt as its currency crisis continues.”

He said that while the picture going forward is anything but clear, for the time being the recovery seems to be strengthening.

Freight appears to be at a turning point. While freight volumes have declined by 5% since May, October saw an end to the decline. However, Bisignani stressed that a single month does not make a trend, and it remains to be seen if this is the stabilisation in freight volumes or the start of an upward trend.

Improvements in demand are being met by a cautious approach to capacity expansion. A cargo capacity expansion of 9.2% was well below the demand increase of 24%.

The 14.4% year-on-year increase in freight traffic for October was marginally weaker than the 15.5% recorded in September. Nonetheless, international freight volumes actually improved slightly from its September level on a seasonally adjusted basis.

Asia-Pacific airlines reported a 14.9% year-on-year increase in international freight demand, down from the 16.2% recorded in September. October’s growth translates to an impressive 22% annualised growth rate for the region’s carriers, reflecting the strong economic recovery particularly in China and India. With a 44% share of total freight traffic, the growth experienced by Asia-Pacific airlines played a large role in the uptick seen in overall industry freight volumes during October.

European airlines recorded a 12.1% year-on-year demand increase in October.

North American carriers saw a slightly larger improvement of 12.2%. For both regions, October freight volumes represented a 6% improvement on freight volumes carried in December 2009. Relative weakness in the euro and US dollar is helping export activity and boosting freight traffic.  Even so, traffic remains 12% below pre-recession levels of early-2008 for European airlines and just 2% higher in North America.

“Not all in the supply chain have the same courage to change,” added Bisignani.  “We have been waiting decades for the efficiency of a Single European Sky. Average air traffic management costs per flight in Europe are €771 compared with €440 in the US. This is a €5 billion competitive disadvantage for Europe that affects everybody that flies or ships goods by air. Reluctance to change continues to put the program at risk. It is extremely disappointing to see some European state governments refusing to implement the 4.5% cost reduction target for 2012-14 agreed by the independent Performance Review Board.”

He pointed out that with inflation expected to be 1.6% – 2% and with traffic growth of 3.2%, the cost reduction target is achievable simply by containing costs.

He concluded: “If Europe’s air traffic management community cannot see the need for change, I hope that Europe’s Transport Ministers will. I urge them to support the European Commission in building a more competitive Europe, driven by serious performance targets and with a modern cost-efficient approach to air traffic management that is the Single European Sky.”

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