Air cargo demand picks up in China

A slight recovery of factory output in China after the Lunar New Year holiday, a rise in manufacturing exports elsewhere and incremental improvement in inflation are helping global demand and rates achieve some sense of seasonal stability after a yearlong slump.

But the outlook remains murky, with green shoots pointing to a second-half recovery against a backdrop of difficult economic conditions. If import/export activity grows, the likely beneficiary will be container shipping lines- not airlines. Plus, an influx of capacity from restarted international passenger services, combined with weak demand, is weighing on rates.

The normal peak season failed to materialise last year, but air cargo executives said demand really went off a cliff in December. Volumes have slowly increased on a sequential basis in recent weeks after a slow start to the year, according to analysts and data services. Market intelligence firm Xeneta reports week over week volumes ticked up 2 per cent. Several air corridors from Asia to North America and Europe are more active.