Global air freight dwindled for the 10th straight month in August, marking the longest declining streak in more than a decade, as the year-long tit-for-tat tariffs between the world’s two biggest economies crimped shipments.
The world’s air freight, measured in freight-tonne kilometres, fell 3.9 per cent in August from a year ago, according to data by the International Air Transport Association (IATA). Asia-Pacific airlines, which account for the lion’s share of worldwide air cargo, or 35.4 per cent, saw their traffic falling by 5 per cent, the biggest decline after the 6.7 per cent decrease in the Middle East, the data showed.
“This is deeply concerning,” said IATA’s Director General Alexandre de Juniac. “Not since the Global Financial Crisis in 2008 has demand fallen for 10 consecutive months … and with no signs of a detente on trade, we can expect the tough business environment for air cargo to continue.”
The busiest airfreight routes between Asia and North America suffered the biggest contractions with a 5 per cent drop in seasonally adjusted volume in August, as US tariffs on Chinese toys, electronics and perishable produce including caviar and fruit jam crimped shipments. Major air cargo routes connecting Europe, Asia and North America have all declined since their peaks in the spring of 2018.
Air cargo consists of high value products and components. E-commerce companies are heavily dependent on the air cargo industry, which has also been upgrading cold storage capabilities in anticipating of rising business from the pharmaceutical industry.
IATA reported that freight capacity, measured in available freight tonne kilometres (AFTKs), rose by 2 per cent year-on-year in August 2019. Capacity growth has now outstripped demand growth for the 16th consecutive month.
Hong Kong’s airport, the world’s busiest air cargo hub, handled 5.1 million tonnes of cargo last year, accounting for 42 per cent, or HK$3.71 trillion, of the value of the city’s trade. The airfield handled 1.167 million tonnes of cargo from May to July, a decline of 8 per cent compared with last year, according to Hong Kong government statistics.
DHL Worldwide Express, the Deutsche Post unit that accounts for 13 per cent of Hong Kong’s air delivery every day, said its airborne cargo has suffered a big enough decline to signal a downturn in overall trade volume, even if seaborne cargo remained steady.
The outlook for mainland China’s trade-in September dropped by four points since June to 45, against a global score of 47, according to DHL’s Global Trade Barometer, where a score above 50 indicates growth. China’s overall airborne trade contracted to 43 in September, from 51 in June, DHL’s data showed.
“Whilst this quarter’s index indicates a continued deceleration in China’s trade growth, it equally reveals an interesting shift toward new opportunities to further strengthen the country’s economy,” said DHL Global Forwarding’s Greater China Chief Executive Steve Huang. “The increase in air imports of raw materials and machinery parts are in line with recent plans to move from high-speed to high-quality growth, concentrating on the adoption of artificial intelligence, smart manufacturing and renewable energy to establish countrywide infrastructure projects.”
Declining trade has left its impact on Cathay Pacific Airways, Hong Kong’s dominant home-grown carrier, causing its first-half cargo revenue to decline 11.4 per cent to HK$11.498 billion. Only a 5.6 per cent rise in passenger revenue offset the shrinking cargo volume to push the carrier’s sales to increase by 0.9 per cent to HK$53.55 billion in the six months ended June.
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