US-China Tensions | Longest Freight Decline Since 2008; IATA

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MOTERAL: The International Air Transport Association (IATA) has warned that ongoing tensions between the US and China is a major factor in the tenth consecutive month of year-on-year decline in freight volumes.

This is the longest period of decline since 2008 when the global financial crisis was at its peak.

The new report by the IATA has said that freight tonne kilometers (FTKs), contracted by 3.9% in August 2019, compared to the same period in 2018.

Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 2% year-on-year in August 2019. Capacity growth has now outstripped demand growth for the 16th consecutive month.

Weakness in some of the key economic indicators and rising political uncertainties worldwide are at the fore. Global trade volumes are 1% lower than a year ago.

Alexandre de Juniac, IATA’s Director General and CEO, commented: “The impact of the US-China trade war on air freight volumes was the clearest yet in August. Year-on-year demand fell by 3.9%. Not since the global financial crisis in 2008 has demand fallen for 10 consecutive months.

“This is deeply concerning. And with no signs of a détente on trade, we can expect the tough business environment for air cargo to continue. Trade generates prosperity. Trade wars don’t. That’s something governments should not forget.”

In the North American region, airlines saw demand decrease by 2.4% in August 2019, compared to the same period a year earlier. European airlines posted a 3.3% decrease in freight demand in August 2019 compared to the same period a year earlier. In the Middle East, airlines’ freight volumes decreased 6.7% in August 2019 compared to the year-ago period. This was the sharpest drop in freight demand of any region.  American airlines experienced an increase in freight demand in August 2019 of 0.1% compared to the same period last year and a capacity decrease of 2.9%. Low economic growth compounded by the US-China trade war and political instability in some countries have impacted the region’s performance. Recent currency volatility in the region’s key economies have also contributed.

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