African airlines grow in cargo volumes, Nigeria, S’ Africa underperforming

AFRICAN airlines have been reported to grow in cargo volumes by 5.2 per cent. While major economies such as Nigeria and South Africa are under-performing, regional trade activity is said to be holding up, which showed capacity to rise by 2.4 per cent, strengthening the load factor.      

   According to the International Air Transport Association (IATA) data for global air, freight markets have shown 3.2 per cent expansion in freight tonne kilometers (FTKs) in January 2015 compared to the same month last year. 

The body however, noted that the growth has been slower than the average of 4.5 per cent recorded for 2014.

   There was much regional variation in the January performance, such as Asia-Pacific, African and Middle Eastern airlines, which expanded strongly, but airlines in Europe and North and Latin America all reported demand contractions. 

  Although it is too early to be certain of a trend towards weaker airfreight, there are at least two emerging factors which could negatively impact demand for air cargo in the coming months, said IATA.

   Besides, it stated business confidence has been declining since mid-2014 and export orders tailed-off towards the end of the year, adding that a reversal of the positive trade-to-domestic production ratio, which boosted cargo volumes last year

   “January was a disappointing start to the year for air cargo. And it is difficult to be too optimistic about the rest of the year given the economic headwinds in Europe and growing concerns over the Chinese economy. Add to that the continuing trends of on-shoring production and trade protectionism and 2015 is shaping up to be another tough year for air cargo,” said the Director General and Chief Executive Officer, IATA, Tony Tyler.

  He added: “The global air cargo industry continues to face challenges. While vulnerability to the economic cycles is beyond the control of any business sector, it is clear that the air cargo industry needs to do a better job of improving its value proposition. 

   “Shippers rightly demand modern processes. Taking e-air waybill penetration above 22 per cent in 2014 was a strong signal that the e-cargo revolution is finally taking shape. This year’s World Cargo Symposium is an opportunity for the entire industry to sharpen further its focus on innovation, efficiency and high-quality service,” said Tyler.

   According to IATA, Asia-Pacific carriers grew their FTKs by 6.9 per cent compared to January 2014, supported by an improvement in regional import activity. The body also said that Japan’s expansion has been helping regional volumes, but there could be concerns over the Chinese economy, which saw export orders contracting at the fastest pace in three years, as capacity rose by 5.4 per cent.

  IATA added that European airlines saw volumes fall by 1.2 per cent compared to a year ago, stressing that the Eurozone has been facing deflationary economic headwinds and the weakness of the Russian economy has also been impacting demand. 

   North American carriers also experienced a 1.0 per cent fall in FTKs, which it said to be most likely due to the strong result that occurred in January 2014, adding that the underlying trends for North American volumes are positive. Trade is growing and the month-to-month comparison of FTKs shows expansion in January compared to December. Capacity fell 2.8 per cent, continuing the recent trend of improving load factor, IATA stated.

   Also, Middle Eastern carriers expanded FTKs by 9.2 per cent. The hub strategies of the leading airlines in the region are proving successful as network and capacity expansions help satisfy demand on international routes and serve inward trade to Middle Eastern economies with capacity jumped by 18.1 per cent.

   Aside that, Latin American airlines suffered a 6.4 per cent fall in FTKs compared to January 2014. According to IATA, the region continued to be affected by the weakness in the key economies of Brazil and Argentina.