Global air freight sees signs of improvement

The International Air Transport Association (IATA) announced international scheduled traffic results for May showing passenger demand declining 9.3% compared to the same month in previous year while freight demand was down by 17.4%. International passenger load factors stood at 71.2%, down from 74.5% recorded in May 2008.

The 17.4% decline in international cargo demand is a relative improvement compared to the 21.7% drop in April. Since December 2008, cargo demand has been moving sideways in the -20% range. This is one of the first physical signs of the economic recovery being anticipated in equity markets.

In May, freight volumes rose by around 3% above April levels as manufacturers began to add to their product inventories in anticipation of an economic recovery.

However, inventories remain 10-15% higher than normal in relation to sales levels, indicating that a
significant recovery is not expected in the near term.

Surveys of purchasing managers indicate we could experience a further improvement in air freight demand during June and July to levels that are 12-15% below last year levels.

Most regions were relatively aligned in the severity of the freight declines. Latin American carriers were the worst performers with a 21.0% fall, followed by Africa (-20.0%), Europe (-19.2%), North America (-18.8%), and Asia Pacific (-18.1%). Middle East carriers were the exception with a 3.7% fall.
Capacity adjustments in freight markets have been catching up to demand declines. Freight load factors are 3.6 percentage points lower than a year ago. Freight yields fell by 17% in the first quarter, reducing revenues by 35%.

Given the continuing downward pressure on yields, even the improvement in volumes in May will likely come without a corresponding improvement in revenues.

He may have hit bottom, but we are a long way from recovery, said Giovanni Bisignani, IATA Director General and CEO. capacity is not aligned with demand. Passenger load factors dropped 3.3 percentage points over the last 12 months. The impact on revenue is dramatic. After a 20% fall in international passenger revenue in the first quarter, we estimate that the drop accelerated to as much as -30% in May. This crisis is the worst we have ever seen, said Bisignani.<Korea Shipping Gazette>