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Cargo economic outlook Q3 2012

Cargo profitability at risk

Cargo profitability has come under downward pressure in the third quarter of 2012, with the minor improvement in air freight demand in the first half of the year 2012 stalling, yields declining, and oil prices surging once again.

Continued expansion in world trade has helped air freight markets stabilize, as has the lack of an inventory overhang. But the growth momentum in trade volumes is slowing, and business confidence has reversed the upward trend seen earlier in 2012, declining for the last 3 months.

Freight Traffic Growth, Source: IATA, ACI

Freight Traffic Growth

 

Weak demand

Demand drivers have also weakened, with consumer confidence falling in China, the US and particularly in Europe, and with capital investment intentions by Japanese and the United Kingdom companies declining. Freight load factors stabilized in first half of 2012, but aircraft utilization has been declining, and freight rates continue to be under downward pressure.

Looking forward, cargo heads surveyed in July 2012 have become more cautious, expecting cargo yields to decline over the next 12 months, and traffic to increase only modestly.

Consumer Confidence, Source: Haver Analytics

 View the full Cargo e-Chartbook report (pdf) for the third quarter of 2012.

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