Economic Outlook Q4 2013
Airline cargo businesses are starting to see a slightly better demand environment and further improvement in forward looking indicators, but continued increases in capacity have kept downward pressure on yields and revenues. Air freight growth has improved in 2013 compared to 2012, in line with positive cyclical developments in business conditions.
Purchasing managers confidence survey and air freight demand
According with the Cargo eChartbook Q4 (pdf), business confidence has been on the rise since the start of the third quarter. Consumer confidence in Europe is at the highest levels since 2011, and stronger economic performance has stopped earlier declines in Chinese consumer confidence.
Good perspectives but restricted growth
These developments have supported a rise in demand for air freighted commodities like semi-conductors. However, expected gains have been limited by an on-shoring of production, which has limited international trade growth.
Ratio of world trade to domestic industrial production
Moreover, continued increases in capacity have countered the modest improvements in demand, causing yields to decline. This trend could continue as new aircraft deliveries come into service in 2014.
Cargo heads surveyed in October 2013 remain broadly optimistic, expecting yields to improve slightly over the next 12 months. This is supported by views of an increase in traffic growth.