Business inventory cycle drives global airfreight growth

The air cargo industry is regaining ground lost in the recent recession, with the International Air Transport Association (Iata) recording strong demand in February. While the 26.5% growth in February is healthy, the direct year-on-year comparison gives off a bit of a false message. Iata pointed out that cargo hit bottom in December 2008, with little improvement realised by February 2009. The association reckons that cargo traffic has a further 3% to recover in order to return to pre-crisis levels. “We are moving in the right direction,” said Giovanni Bisignani, Iata’s directorgeneral and CEO. “In two to three months, the industry should be back to pre-recession traffic levels. This is still not a full recovery. The task ahead is to adjust to two years of lost growth.” Looking at international cargo demand, measured in freight tonne kilometres (FTK), Iata noted that the European airlines were benefiting least from the strong upturn in airfreight volumes. The region showed year-on-year growth of just 7.2%, compared to the 26.5% average. It was completely the other way round in North America. Iata said that, despite the sluggish US economy, North American airlines have seen a rebound of 34.1%. That compared favourably with the 34.5% growth experienced by Asia-Pacific, the Latin American airlines, which recorded growth of 41.9%, and 33.1% in the Middle East. Africa, meantime, nearly stole the prize for star performer, with a thumping growth figure of 36.5% – a rate which was only beaten by the Latin American air cargo industry. The bulk of the expansion, according to the association, was therefore attributed to businesses restocking inventories. Indeed, it noted that the strong global airfreight upturn had been largely driven by the business inventory cycle. “We can expect this part of the cycle to wear out in the second half of the year when inventories reach normal levels,” said Bisignani.