*Air cargo continues to suffer from weak global trade and the intensifying trade dispute between the US and China

Middle Eastern airlines’ freight volumes decreased 5.5% in July compared to the year-ago period as air cargo continues to suffer from weak global trade and the intensifying trade dispute between the US and China.

According to the International Air Transport Association (IATA), this was the “sharpest drop” in freight demand of any region. Capacity increased by 0.2%. Escalating trade tensions, the slowing in global trade and airline restructuring have impacted the recent performance.

IATA data for global air freight markets showed that demand, measured in freight tonne kilometres (FTKs), contracted by 3.2% in July, compared to the same period in 2018. This marks the ninth consecutive month of year-on-year decline in freight volumes.

Global trade volumes are 1.4% lower than a year ago and trade volumes between the US and China have fallen by 14% year-to-date compared to the same period in 2018.

The global Purchasing Managers Index (PMI) does not indicate an uptick, it said. Its tracking of new manufacturing export orders has pointed to falling orders since September 2018.

And for the first time since “February 2009”, all major trading nations reported falling orders, IATA said.

Freight capacity, measured in available freight tonne kilometres (AFTKs), rose by 2.6% year-on-year in July 2019. Capacity growth has now outstripped demand growth for the ninth consecutive month.

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

Africa and Latin America both recorded growth in air freight demand compared to July last year.

African carriers posted the fastest growth of any region in July, with an increase in demand of 10.9% compared to the same period a year earlier, IATA noted. This continues the upwards trend in FTKs that has been evident since mid-2018 and makes Africa the strongest performer for the sixth consecutive month. Capacity grew 17% year-on-year.

Strong trade and investment linkages with Asia have underpinned a double-digit increase in air freight volumes between the two regions over the past year.

IATA's director general and CEO Alexandre de Juniac said, “Trade tensions are weighing heavily on the entire air cargo industry. Higher tariffs are disrupting not only transpacific supply chains but also worldwide trade lanes. While current tensions might yield short-term political gains, they could lead to long-term negative changes for consumers and the global economy. Trade generates prosperity. It is critical that the US and China work quickly to resolve their differences.”