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Economic outlook

Cargo markets look to improve on weak 2012

Air freight continued to struggle in Q4-2012

Airline cargo businesses continue to face difficult conditions with demand for air freight falling in Q4, yields continuing to trend downward, and oil prices remaining high.
Although world trade volumes continue to expand, growth has slowed as the European economy contracts overall in 2012.

Freight Traffic Growth


Not surprisingly, European confidence fell further in Q4, as reflected in depressed demand for air-freighted commodities including semi-conductor shipments. Furthermore, capital investment intentions by Japanese and UK companies remain weak.

But is the outlook for air freight better in 2013?

Despite the challenging aspects described above, there were some positive indications in the demand backdrop.

There is still no sign of an inventory overhang, and the decline in business confidence seen throughout Q3 has now reversed. Consumer confidence in the US has improved over the last few months, which could offset some of the downward pressure on demand coming from Europe.

And although freight load factors and aircraft utilization rates have declined on the back of falling demand and continued fleet expansion, cargo heads surveyed in October 2012 are optimistic for the year ahead. Therefore, we expect cargo volumes to improve this year compared to 2012, which is in line with expectations for economic growth and world trade.
Purchasing Managers confidence survey and Air Freight Demand
Latest traffic statistics (November 2012) have shown an upsurge in air freight demand. According to Tony Tyler, IATA’s Director General and CEO, “it is premature to consider this a turning point for air cargo markets in terms of bouncing back and regaining lost ground. But, when coupled with positive economic developments in the US and an improvement in business confidence in recent months, the conditions are aligning to see a return to growth in 2013. In 2013 we expect that cargo volumes will grow 1.4%”.

Download the full Cargo e-Chartbook for Q4-2012 for in-depth analysis.


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