US-China Trade War: Air cargo suffers

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Air cargo has continued to suffer from weak global trade and the intensifying trade dispute between the US and China as global trade volumes are 1.4% lower than a year ago and trade volumes between the US and China have fallen by 14% year-to-date compared to the same period in 2018.

A data for global air freight markets released by the International Air Transport Association (IATA) indicated and showed that demand, measured in freight tonne kilometers (FTKs), contracted by 3.2% in July 2019, compared to the same period in 2018.

The global Purchasing Managers Index (PMI) does not indicate an uptick. Its tracking of new manufacturing export orders has pointed to falling orders since September 2018. And for the first time since February 2009 all major trading nations reported falling orders.

Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 2.6% year-on-year in July 2019. Capacity growth has now outstripped demand growth for the 9th consecutive month.

Within the month, African carriers posted the fastest growth of any region in July 2019, with an increase in demand of 10.9% compared to the same period a year earlier.

‘’This continues the upwards trend in FTKs that has been evident since mid-2018 and makes Africa the strongest performer for the sixth consecutive month. Capacity grew 17% year-on-year. Strong trade and investment linkages with Asia have underpinned a double-digit increase in air freight volumes between the two regions over the past year.

“Trade tensions are weighing heavily on the entire air cargo industry. Higher tariffs are disrupting not only transpacific supply chains but also worldwide trade lanes. While current tensions might yield short-term political gains, they could lead to long-term negative changes for consumers and the global economy. Trade generates prosperity. It is critical that the US and China work quickly to resolve their differences,” said Alexandre de Juniac, IATA’s Director General and CEO.

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