IATA: positive momentum in FTKs may be paused due to sluggish trade, Brexit and weak demand

IATA, via its 2Q2016 Cargo Chartbook, stated (28-Jul-2016) the air cargo market had a weak 1Q2016 but recovered and grew in 2Q2016 and Jun-2016 levels point to 4.1% year-on-year growth in FTKs. FTKs increased 0.5% for the year to Jun-2016. Performance in 2016 is understated due to the boost from the US west coast port backlog in 2015. European carriers' FTKs grew in 1H2016, including strong growth in Europe-Asia air trade in 2Q2016. Middle East carriers accounted for the largest share of growth (36%) in 2Q2016, while Asian carriers accounted for 32% and European carriers accounted for 20%. Growth was elusive for Latin American carriers as regional trade and macro economic weakness led to contraction in traffic. IATA said the confluence of a sluggish world trade outlook, the Brexit aftermath and weak demand drivers suggest positive momentum in FTKs in 2Q2016 may be paused. IATA noted the following:

• The UK vote to leave the EU reversed expectations for the global economy in 2016, which is now expected to decelerate rather than record moderate improvement;
• Continued strength of the US dollar and global economic weakness added headwinds to the US, but underlying drivers in the US economy remain positive;
• Global merchandised trade continues to contract in 2016 with falls in every month, except for a 0.8% increase in Feb-2016. The contraction is partly explained by poor performance of bulk commodities and heavy industry;
• Global PMI for export orders recovered somewhat since a significant dip in Feb-2016 and the improving trend, although weak, is a positive development for airfreight. However, figures to not reflect the Brexit risk and should be treated with caution;
• The decrease in semi-conductor shipments points to weaker demand drivers for air freighted commodities in the short term;
• Consumer confidence continued to improve in 2Q2016 and remains strong, although it remains to be seen if it will be adversely impacted by Brexit in the short-term. [more - original PR]