Global air freight tonnage fell by – 0.7% in 2011 compared to 2010. Freighters being parked.
IATA data show there was a fall of – 0.6% in tonnage (FTKs) of international air freight globally in 2011. There was a larger fall in domestic air freight, of – 1.4% giving an overall decline of – 0.7% compared to 2010. The industry is not optimistic about next year’s air freight volumes, and air cargo companies are having difficulty remaining profitable. Earnings per tonne of cargo have fallen. Air freight capacity rose 5.2% in 2011, according to the IATA figures, as many companies had deliveries of new freighters that they now cannot fill. Their load factors are going down. World trade is flat, while international air FTKs (freight tonne kilometres) are dropping sharply, indicating that cargo is now being moved by other transport modes. Increasing numbers of air freighters are being parked in the Mojave desert.
IATA report for December 2011, including all of 2011 is at http://www.iata.org/pressroom/pr/Pages/2012-02-01-01.aspx with data at
International air freight was down – 0.6% in 2011 compared to 2010. Domestic air freight was down – 1.4%. Overall air freight was down – 0.7%.
For Europe, international air freight was up + 1.5% and domestic air freight up + 1.3%.
By contrast, back in February 2011, IATA was saying:
International Freight Demand
- Freight demand growth varied wildly over the year  from a high of 35.2% in May to a low of 5.8% in November. Overall the industry is trending towards normal growth pattern in line with the historical growth rate of 5-6%.
- The regional variation in growth remains particularly marked. Latin American carriers recorded the highest full-year growth rate of 29.1%, followed by Middle East carriers (accounting for 11% of the market) at 26.7%, Asia Pacific airlines (with a 45% market share) grew by 24.0%, Africa at 23.8% and North America by 21.8%. Against these industry gains, Europe’s 10.8% growth stands out as exceptionally weak.
CAPA article on 2011 air freight
There is extensive coverage of what has been happening to global air freight in a long article by CAPA at
The article includes this chart:
They also comment that :
The traffic outlook also looks challenged, as air freight customers maintain a pessimistic outlook and further cut cargo shipments. “Although there is no obvious inventory overhang, pessimistic expectations are driving the need for air freight down, with purchasing managers confidence index indicating no growth prospects,” IATA said. IATA has also highlighted some changes in demand drivers, noting: “Consumers in Europe have become more pessimistic as the year has progressed, but American consumers have managed to regain some confidence. World trade is flat, while international air FTKs are dropping sharply, indicating that cargo is now being moved by other transport modes”.
Cargo-only carriers still maintain a larger portion of freight, despite declines from their peak in 1Q2011 by 8%. Belly hold freight volumes have also fallen by the same amount, from highs reached in 2Q2010.
Air freight carried by freighter or belly hold (airline sample): 2004 to 2011
Source: IATA Cargo E-Chartbook for 4Q2011
February 13, 2012
Signs of cargo’s woes fill desert
By Robert Wright (FT)
After landing, they are towed away and parked, protected by the desert’s dry atmosphere from deterioration. Many may eventually be brought back into service, but others will be scrapped.
The traffic into the Mojave airports reflects the combination of factors that conspired to send average earnings per tonne of air cargo plunging by nearly 8 per cent in the year to October, while rates on the key south-east Asia to Europe routes fall 24 per cent. According to figures from IATA, the international air transport organisation, freight tonne kilometres – the weight of goods moved multiplied by the distance flown – declined by 0.6 per cent worldwide in 2011 compared with 2010, with the declines far sharper in the worst months.
To make matters worse, the industry has also been receiving a rash of aircraft deliveries, including Boeing’s 777 freighter and 747-8F and Airbus’s A330-200F, some of which were delayed by production problems. Air freight capacity rose 5.2 per cent in 2011, according to the IATA figures. A substantial rise in fuel prices, however, is ensuring that operators are putting the new, more fuel efficient aircraft into service, while sending their older aircraft to the Mojave.
Charles Clowdis, managing director for transportation for IHS Global Insight, the data provider, says the new aircraft are doing “good things and bad things”. “They’re energy efficient and fuel efficient, but also adding capacity,” he says. And the excess capacity could defeat the point of the improved fuel efficiency. “There’s no real efficiency flying a half-loaded cargo aircraft,” he says.
Alan Braithwaite, a logistics consultant, says the question is whether the slump will be over quickly enough for operators to survive the financial damage.
“Everybody is just holding their breath to see if it’s a short-term blip and things pick up or whether there’s a sustained downturn in trade,” Professor Braithwaite says.
The challenge for the air freight industry, according to Mark Parsons, a senior executive in the UK and Ireland supply chain business of DHL, the logistics operator, is that its product tends to be used on an emergency or temporary basis.
Suppliers that have made mistakes can be pressurised into rushing goods to market by air as a punishment, Mr Parsons says. Alternatively, companies launching products may decide to put most of their items on container ships, the standard way of moving goods, but send a few by air to provide launch stock.
Demand can nevertheless be quick to fall off when shippers feel slackening demand gives them little need to rush goods to the shops. Air freight demand started falling in the middle of last year, months before demand for container shipping on the Asia to Europe route started shrinking.
The volatile demand leaves the industry heavily reliant on either strong Christmas sales in Europe and North America or successful launches for new consumer products.
“I, tongue-in-cheek, said last year that perhaps if someone comes out with an iPhone 9, and the consumers rush because they have to have one, that might spare air cargo for a bit,” Mr Clowdis says.
Yet the long-term hope for the air cargo industry lies in fundamental changes in China’s manufacturing sector. After years of speculation that manufacturing in China was about to make a decisive move inland away from the coasts, the last year has seen a significant number of plants making the latest, high-value electronic goods opening in inland cities. Some such goods may be trucked, or sent down the Yangtze River, to the seaports that have traditionally been China’s trade gateways. But there are signs that many goods will go by air.
“You have a high-value, low-weight commodity that can be flown much more practically than moved over the roads,” Mr Clowdis says. “It’s going to be good for the market. It’s going to be especially good for the intra-China market.”
Until the market in the Chinese interior heats up, however, the outlook according to most observers remains grim. Prof Braithwaite says that even minor demand shortfalls could have a significant effect. “Really quite small movements in volume have a very big impact on price,” he says.
This year, according to Mr Clowdis, will not see enough new Chinese business or spikes from new product launches to save the industry from significant losses. Far more cargo aircraft are likely to arrive in the Mojave. “It’s not a prolonged recovery and we’ve not had any of those electronic revolutions in the last three or four months,” he says.