Another strong month for FTKs

IATA has released Air Freight market analysis for the month of August 2017. The report says that it was another strong month for FTKs, but signs that cyclical peak is near. Global freight tonne kilometres grew at a double-digit annual pace in August for the fifth time in 6 months (12.1%). Indicators continue to suggest that the cyclical upturn in air freight growth may be nearing a peak. However, with the seasonally-adjusted (SA) traffic trend remaining robust, the data are currently not showing this impact. All regions except Latin America posted double-digit annual intl  volume growth in August, led by airlines in Africa. Demand in August grew two-and-a-half times faster than capacity, helping to boost the industry-wide load factor.

The report released by IATA said; More generally, the recent outperformance of air freight relative to wider world trade remains consistent with the typical pattern seen at the start of upturns in the global economic cycle. This relates in large part to the ability of air freight to allow firms to restock quickly. It is no coincidence to see that the increase in the SA trend in industry-wide FTKs has coincided with a sharp decline in the (US) inventory-to-sales ratio during 2016.

Daily utilization rates of widebody freighters are starting to increase, but we have seen less payload capacity added to the fleet so far in 2017 compared to recent years.

International FTKs grew by 12.9% year-on-year in August, up from 12.1% in July. (See Chart 3.) All regions except Latin America posted double digit annual international volume growth in the month.

African airlines topped the international growth chart for the 11th time in 12 months. International FTKs flown by African airlines surged by 29.5% year-on-year in August, slowdown from the rate in July, but stillmore than treble the five-year average pace (8.8%). As we have noted before, the wider pick-up in African airlines - freight volumes has been helped by a surge in traffic between Africa and Asia; while still a comparatively small market, FTKs flown on the route have jumped by more than 67% in the first seven months of the year (the latest data available, 

Middle Eastern airlines international FTK growth accelerated to 14.2% year-on-year in August 2017, from 10.0% in July. The pick-up in year-on-year growth largely reflects a short-lived weaker patch for demand a year ago rather than an acceleration in the current traffic trend. This factor is likely to support growth in the year-on-year growth rate in September too.

International freight volumes flown by airlines based in Asia Pacific the biggest region on this basis - grew by 12.1% year-on-year in August. Volumes increased in SA terms compared to July, and are now almost 6% higher than the level they reached in the rebound following the global financial crisis in 2010. Demand growth has been strong on all the major routes to, from and within the region, particularly to/from Europe and within Asia on which FTKs have grown by more than 14% so far this year. 

European airlines - the second largest region in terms of international FTKs flown - saw a similar-sized increase in year-on-year freight traffic to their Asia Pacific counterparts (12.0%). This was broadly unchanged from the rate of growth seen in July, and was the tenth month out of the past 12 in which annual FTK growth has been in double-digit territory. 

Latin America was the only region not to post doubledigit annual growth in international FTKs in August. Nonetheless, the 9.5% increase in air freight flown by the region - airlines compared to August 2016 was close to a seven-year high and well above the five-year average rate (-0.1%).

Courtesy: IATA Press Release
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