Global air cargo demand grew 4.1% year-over-year in April, recovering from a 23-month low in March but showing increasing signs that trade growth worldwide—in both air freight and global containerized trade—may be weakening as protectionist measures accelerate worldwide, according to IATA’s Air Freight Market analysis released May 30.

Year-to-date, total air freight market growth stands at 5.1%, considerably slower than the 9.3% year-to-date growth of a year ago. The restocking cycle, IATA said, has come to an end, meaning businesses have slowed increasing their inventory to meet high demand. This has become evident in the Asia-Pacific air freight market, which in March saw only 1.9% year-over-year (YOY) growth, followed up in April with 3.9% YOY growth. A year ago, Asia-Pacific’s air cargo traffic was up 8.4% from the previous year, surging on demand for consumer electronics and technology.

IATA noted that new order exports have fallen to their lowest level since October 2016, according to the global manufacturing Purchasing Managers’ Index (PMI), “reflecting a broad-based moderation in export order books for manufacturing firms across the major exporting countries in the world.”

“April saw a strengthening from the abrupt slowdown in growth experienced in March; this is good news,” IATA DG and CEO Alexandre de Juniac said. “But the forecast appears to have increasing downside potential; oil prices continue to rise as does protectionist rhetoric.”

IATA continues to forecast a 4% industry-wide rate of growth for full-year 2018, down from 2017’s 9% YOY growth, which was the strongest of the decade. “This would still be a robust outcome for the air freight segment,” IATA said. “Nonetheless this would need air freight volumes to resume their upward SA [seasonally adjusted] trend in the coming months … unless we see a pick-up in the SA demand trend … the implication is that the annual [demand] growth rate will slow once again towards mid-2018.”

Notably, global freight capacity in April increased 5.1%, faster than the 4.1% demand rate, resulting in a 44.8% total market freight load factor, down 0.5% YOY, and only the second time in 21 months that capacity growth has exceeded demand.

The strongest growth in April air cargo traffic was among Latin American carriers, rising 10.6% YOY, continuing to reflect improving conditions in Brazil, the continent’s largest economy. Among the regions with the largest shares of trade movement, Asia Pacific “is most exposed to any risks of rising protectionism or trade wars,” IATA said, and Europe’s 2.4% YOY growth in April reflects declining export orders out of Germany, combined with the effects of a stronger Euro.  North American carriers international freight traffic was up 4% in April, down from 5.1%, a downward trend that has emerged since the end of 2017, IATA said.

Mark Nensel