Air freight volumes expected to rise in 2019

Air freight volumes expected to rise in 2019

Air cargo volumes are expected to reach 65.9 million tonnes in 2019, the International Air Transport Association (IATA) is forecasting, up from 63.7 million this year.
 
IATA, which represents 290 airlines comprising 82% of global air traffic, said the 3.7% rise is the slowest pace since 2016, reflecting the “weak world trade environment impacted by increasing protectionism”. 
 
Cargo yields are expected to grow by 2.0% in 2019, well below the exceptional 10% yield growth in 2018. It does, however, continue the recent strengthening of the cargo business, since cost increases are lower. 
 
Overall cargo revenues are expected to reach $116.1 billion (up from $109.8 billion in 2018).
 
Average air freight rates in 2019 are expected to be $1.86/kg (2018 dollars) which is a 62% fall on 1998 levels.
 
IATA said lower oil prices and solid, albeit slower, economic growth (+3.1%) are extending the run of profits for the wider global airline industry, after profitability was squeezed by rising costs in 2018. 
 
2019 will complete a decade of profit for the sector, IATA added, and the fifth consecutive year where airlines deliver a return on capital that exceeds the industry’s cost of capital.
 
“We had expected that rising costs would weaken profitability in 2019. But the sharp fall in oil prices and solid GDP growth projections have provided a buffer. So we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year. But there are downside risks as the economic and political environments remain volatile,” said Alexandre de Juniac, IATA’s Director General and CEO.
 
Brexit is tied to this general theme, continued de Juniac: “We don’t have any special insight on how this will play out. But we do know that the industry needs more clarity than we currently have.
 
”There is no Word Trade Organisation fallback for aviation in the event of a no-deal Brexit. So it is good news that the UK is making progress on renegotiating bilateral deals with non-EU countries and that it is discussing contingency measures with the EU.
 
“But that is only part of the story. Time-sensitive critical supplies arrive into the UK by air. So, understanding customs formalities is vital. And, as airlines are already selling tickets for the post-Brexit period, speed in finalising arrangements is essential.”