Air freight passes cyclical re-stocking peak; protectionism threatens

World air freight traffic, measured in freight tonne kilometres (FTKs), grew by 2.7% year-on-year in Jun-2018 (the most recent month for which global figures are available). This was slower than the 3.8% recorded for May-2018 and the 4.7% year to date growth rate for the first six months of the year.

The strong upturn in air cargo demand enjoyed in 2017 has eased, but the outlook remains fairly healthy. This year is expected to be only the second time since 2011 when both cargo traffic and cargo yield increase together. Air freight yields are buoyed by rising jet fuel prices, although yield growth is easing and never matches fuel price growth.

There is a gathering cloud on the horizon for air cargo in the guise of increasing rhetoric and action on protectionist trade policies prompted by US President Trump.