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World Trade Decline Led Air Freight to Lose Momentum

The current situation of growth decline in world trade is observed showing a great impact on air freight demand. Recently, glancing at the figures reported by International Air Transport Association (IATA), one can understand the current demand decline of air freight services. This year from the initial period, the world trade market has seen many declines in trade growth showing an impact on carrier services like air freight. Since from the initial point, the market was down impacting air freights to lose their momentum.

According to my awareness, 2014 was termed as the best optimistic period for cargo services enabling ultimate changes both in demand and growth. But soon there is growth decline recorded in 2015. Even at this disappointing edge, there is some good news aiming for the recovery of cargo service. The introduction of digital processes in handling cargos, ultimate handling services offered for pharmaceuticals and high focus maintained on shipment time to time deliveries have changed the future scope of air freight services aiding for their recovery. Although there is overall growth decline recorded this year, the average growth recorded in the month of April is seen increased by 3.3 percent which was recorded as 5.3 percent in the first three months. Though there is sharp decline seen in many regions, a considerable growth is recorded by the Middle East and Asia-Pacific regions.

We can observe air freights losing momentum gradually these days which is mainly due to continuous challenges faced by them from world trade market. In addition, there is no fast improvement seen in world trade market which is highly disappointing fact for the air freight services. Adding to these factors, there is a sharp decline seen in Europe and Asia-Pacific air cargo markets. Thus, all these factors aiding towards the demand decline of air freights should be sorted out immediately by adopting some measures. I feel it is a good choice to implement facilitation agreement prepared by Bali trade and adopting certain commitments will help to facilitate trade in the upcoming markets.

 

Different Carriers Reporting Different Growths and Declines

It is observed different carriers reporting different results this year compared to last year. As an example, Asia-Pacific carriers last year reported 7 percent capacity expansion which is commendable. This year, same carriers reported 4.5 percent growth in demand, while there is 10 percent decline seen in trade volumes, which is mainly due to trade slowdown in Europe. Similarly, European carriers reported 0.3 percent demand decline last year but this year, these carriers reported some growth. In addition, a considerable increase in oil prices and value of Euro aided towards the growth. At the same instance, a small increase in demand seen in North American airlines by 0.1 percent along with 1.6 percent capacity decline. Thus many factors like the decline in oil prices, strikes took place in the west port became the reasons for low economic performance. Opposite to the complete situation, there is considerable trade growth reported by the Middle East with 14.1 percent air cargo demand and 18.5 percent increase in capacity.

African airlines got affected by the downfall of South African and Nigerian economies reporting declines of 0.2 percent in demand and 2.2 percent in capacity. At the same time, Latin America airlines increased its capacity by 7 percent but reported a demand decline of 6.8 percent. Although, there are continuous declines reported in all these months, there is a hope to see an increase in trade activities from this month which may revert back the demand for air freights within no time.