‘Mideast air cargo demand grows 10.9% until May’

By Pratap John/Chief Business Reporter

Air cargo demand in the region has grown 10.9% year-to-date until May, the International Air Transport Association (Iata) has said in a report.

In addition to their aggressive hub strategy at the crossroads of East and West, and the growth of routes out of Africa to China, the Gulf-based carriers have also been air freighting goods that have arrived by sea. In addition, new routes from the Gulf to Japan are set to benefit from an upswing in Japanese exports, Iata said.

Globally, Iata said the growth in air cargo markets continued to flatline in May, broadly following the trend of the last 18 months.

Global freight tonne kilometers increased just 0.8% in May compared to a year ago.

Capacity, however, increased by 2.1% causing load factors to fall to 44.9% - their lowest level since the post crisis recovery. As about 60% of global air cargo utilises capacity in the belly of passenger aircraft, managing capacity at a time when growth in air travel is outpacing that of cargo is particularly challenging.

The stall in cargo markets appears to be the result of a recent softening in growth in developing economies, including China. Moreover, business confidence is flat globally and declining in some developing economies, meaning chances of a significant upturn in the near future is unlikely.

Europe and particularly the Middle East were the standout year-on-year performers, but poor performance in Asia Pacific and North America dragged growth down

“It is getting harder to find optimistic signs for air cargo growth. The Middle East remains a bright spot, and the rate of decline in the eurozone is easing. But this is offset by the weakening of expansion in Asia-Pacific. It is now clear that the positive global upswing in air cargo at the end of 2012 was an illusion. Air cargo, along with many parts of the world economy, appears to be in suspended animation at the moment,” said Tony Tyler, Iata’s director general and CEO.