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You are here: Home » Publications » Cargo Tracker Newsletter » September 2013 » Economic Outlook Q3

Cargo Economic Outlook Q3 2013

Airline cargo businesses are starting to see an improvement in forward looking demand indicators, but continued increases in capacity have placed downward pressure on yields and revenues over recent months. The demand environment and drivers are showing some positive signs, despite sluggish world trade growth and high jet fuel prices.

 

World trade in goods and air FTK's

 

Good perspectives for the industry

There are indications that finished goods inventories are falling and business confidence has started to increase in Q3 after several months of no change. Consumer confidence in Europe is at the highest levels since 2011, following the first quarter of Eurozone growth in Q2 after 18 months of contraction, and US consumer optimism continues to increase.

 Consumer confidence chart

 

Some of this improvement is being offset by slowdown in the Chinese economy where confidence has slipped, suppressing demand for air-freighted commodities like semi-conductors. But most notably, the better demand conditions are being countered by capacity increases which have caused yields to decline.

The trend could continue if future demand fails to meet capacity expansion in coming months.  Nonetheless, cargo heads surveyed in July 2013 are broadly optimistic, saying they expect yields to remain stable and volumes to increase over the next 12 months.

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