IATA said, “International e-commerce grew in 2018, which was a positive factor for the year. Yet, there was a softening of several key demand drivers:
• Global economic activity weakened;
• The export orderbooks of all major exporting nations, with the exception of the U.S., contracted in the second half of 2018;
• Consumer confidence weakened compared to very high levels at the beginning of 2018.”
Capacity is outstripping demand, said IATA, rising 5.4 percent in 2018 as measured in available FTKs.
In contrast, it said, “Asia-Pacific carriers posted the weakest growth of any region in December 2018, with a decrease in demand of 4.5 percent compared to the same period a year earlier. Capacity increased by 2.6 percent. The weaker performance in December contributed to growth in freight demand of only 1.7 percent in 2018 compared to 2017. Annual capacity increased 5 percent. The weaker performance of Asia-Pacific carriers in 2018 largely reflects a slowing in demand for exports from the region’s major exporters (China, Japan and Korea). Signs of a moderation in economic activity in China and an escalation of trade tensions continue to pose a downside risk to air cargo in Asia-Pacific.”
De Juniac said, “To attract demand in new market segments, the air cargo industry must improve its value proposition. Enabling modern processes with digitalization will help build a stronger foothold in e-commerce and the transport of time- and temperature-sensitive goods such as pharmaceuticals and perishables.”
The forwarding company Flexport said this week in its weekly Freight Market Update that air freight rates out of China, including Hong Kong, had increased with the approach of Chinese New Year. It said shipments out of China might see a one- or two-week delay before departure, but no backlogs were foreseen in Hong Kong. From India and Southeast Asia, it said there is tightness or rising rates in some markets.
Statistics from the U.S. Census Bureau’s USA Trade Online database show that in the first 11 months of 2018, air imports to the U.S. totaled 4.55 million metric tons, a 5.3 percent increase over the same period the prior year. Air exports totaled 3.2 million metric tons, up 6.1 percent.
But when it comes to the value of the merchandise transported, air cargo punches above its weight. In the January issue of the Pacific Merchant Shipping Association’s West Coast Trade Report, Sacramento, Calif., economist Jock O’Connell discussed both sea and air freight, noting that while “various facets of the maritime supply chains do have an enormous physical presence and employ legions of workers,” there is another side of the story: When the value of the merchandise transported by air is examined, “the value of the goods transported in maritime containers is much less imposing than one might conclude from what we read in the papers or see on TV.”
O’Connell did his calculations using the Census Bureau’s stats for the first 10 months of the year, but the story is similar for the first 11 months of the year. Those stats were released earlier this week. Of the $2.3 trillion worth of goods imported into the U.S. in the first 11 months of 2018, 26.1 percent moved by air, 32.1 percent in containers, 14.1 percent in non-containerized vessels and 27.7 percent by other means such as road, rail and pipeline to nearby countries like Canada and Mexico.
With the $1.53 billion of exports, 29.6 percent moved by air, 17.4 percent in containers, 17.7 percent in non-containerized vessels and 35.3 percent by road, rail or pipeline.
The high value of air cargo exports “shouldn’t be surprising given the generally high-value, time-sensitive nature of what’s transported by air,” said O’Connell.