Cargo growth strong as China exports pick up
Air freight volumes increase for a second month, with strong growth in Chinese exports boosting confidence in global trade prospects
Global air freight growth has bounced for a second consecutive month, on the back of rising Chinese export orders that signal strengthening world trade, data from the International Air Transport Association (Iata) shows.
"The outlook for air cargo is clearly getting better," said Tony Tyler, director-general and chief executive of Iata, which predicts Chinese exports and emerging-Asia trade volumes will sustain growth momentum for cargo carriers in the region.
Global air freight volumes rose 5.1 per cent year on year in August, following a 6.1 per cent increase in July, according to Iata data.
Airlines in all regions, led by those in the Middle East, Asia-Pacific and North America, reported expansion in freight tonne kilometres (FTK) - the industry measure of cargo volume.
FTKs of Asia-Pacific airlines increased 6.3 per cent in August, against 5.5 per cent seen in North America.
The Asian growth, however, was slower compared to July's 7.1 per cent, but not sufficiently so to dent Iata's confidence in the broad rebound it believes to be taking hold.
"A notable rise in Chinese export orders bodes well for future demand growth," Iata said in its monthly freight report.
Chinese exports rose 14.5 per cent in July and 9.4 per cent in August, beating expectations. Meanwhile, the September new export orders component of the widely watched HSBC/Markit purchasing managers index hit its highest level since March 2010.
Data this week from South Korea for September - though showing worryingly sluggish domestic demand and low inflation - also showed solid export growth of 6.8 per cent year on year. Its shipments to China posted annual growth for the first time in six months.
Taiwan's August exports surged 9.6 per cent from a year ago to US$28.1 billion, the second highest on record for a single month, helped by increased electronic goods shipments.
"This should help sustain positive trade momentum in the region, which in turn ought to continue driving demand for air freight services on local carriers," Iata said, noting that solid growth in emerging Asia trade volumes also supports demand for freight on Asia-Pacific carriers.
Japan, the world's third-largest economy still struggling to return to growth, was the only one of Asia's four key exporting economies to experience a fall in shipments in August.
Asia-Pacific is the world's biggest cargo market, accounting for roughly 40 per cent of global volumes and home to major cargo carriers such as Cathay Pacific, Korean Air and Asiana Airlines.
Iata said the fortunes of carriers in the region "are tied to the strength of major economies such as China, Japan and South Korea", which are expanding again after a slowdown at the start of the year.
Europe remains a weak spot, with only 1.4 per cent cargo growth in August. Latin American carriers' growth was slower still - just 1.1 per cent from 7.6 per cent in the previous month. The drop came as the Brazilian economy slowed down along with regional trade activity.
Tyler warned the extent of future gains could be limited in spite of the generally positive outlook.
"Businesses are reported to have more confidence in the future but the list of political and economic risks continues to moderate how that confidence translates into actual activity," he said.