Airline freight: softer trends creating concern for the global economy

If trends in air freight activity still retain their historic ability to act as an early warning indicator for the global economy, there may be grounds for some concern. According to data from IATA, air freight traffic fell year-on-year for the third consecutive month in Jan-2019 and reached their slowest rate of annual growth in close to three years. Freight load factor and yield are also sliding.

IATA noted that the softness in air cargo traffic went beyond what might have been expected following a temporary surge in activity from the global inventory restocking cycle. This drove strong growth in 2017, but the trend has been weakening since mid-2018. There is a clear divergence between air freight and passenger trends.

In the global financial crisis of 2008-2009 air freight activity fell earlier, and more deeply, than passenger activity. In the post-crisis period, air cargo helped to lead the recovery.

Since then, its share of world airline revenue has reduced somewhat and the industry has become more profitable. Nevertheless, airlines would certainly not welcome a slide in cargo revenue. Nor would they, or would any industry, want the deteriorating air freight outlook to have wider implications for the world economy.