Will Slower Growth Be The Norm Now?

IATA data for air cargo in May showed that the growth trend had come down and cited three reasons for that.

The International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), rose 4.2 percent in May 2018, compared to the same period the year before. This was slightly down from the 5.2 percent (revised from 4.1 percent) growth in annual demand recorded in April 2018.

Freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 6.2 percent year-on-year in May 2018. This was the fourth month in a row that capacity growth outstripped demand growth.

After a weak start to 2018, demand for global air freight has now resumed a modest trend upwards. However, the rapid growth seen in 2017 is now over, with demand growing at a significantly slower pace in 2018. In IATA’s mid-year industry outlook, 2018 freight growth was revised downwards to 4.0 percent (from the previously forecasted 4.5 percent in December 2017)

There are three indications that growth will continue at a slower pace:

The re-stocking cycle which required quick delivery to meet customer needs is over

The new export orders component of the global manufacturing Purchasing Managers’ Index (PMI) is at a 21- month low

Global trade appears to be softening as trade tensions increase