Executive Briefings

Air Cargo Not Keeping Up with Growth in Passenger Traffic

There is a growing mismatch between the performance of the passenger and cargo sides of the airline business, IATA has revealed. A 5.3-percent growth in passenger numbers in 2012, with a 3-percent improvement in yield, contrasts sharply with the 2-percent fall in both freight tonne-kilometers and cargo yield.

These curves used to match each other only started to diverge in early 2011. There are also other signs that "something strange is going on," according to Julie Perovic, IATA's senior economist. World trade has grown steadily for three years but has lost its correlation with airfreight, which she said was "dropping off" while container shipping volumes have held up well.

Inventory-to-sales ratios have stayed level for three years, however, so it wasn't the case that businesses were stockpiling and could afford to move products more slowly. "It's not displacement," Perovic said.

The likely answer was that emerging economies such as China, India and Latin America were now driving global growth and were transporting bulk commodities by sea rather than flying low-volume, high-value goods. The U.S. and Europe have lost their historic dominance and were now responsible for just 9 percent and 7 percent, respectively, of trade growth.

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These curves used to match each other only started to diverge in early 2011. There are also other signs that "something strange is going on," according to Julie Perovic, IATA's senior economist. World trade has grown steadily for three years but has lost its correlation with airfreight, which she said was "dropping off" while container shipping volumes have held up well.

Inventory-to-sales ratios have stayed level for three years, however, so it wasn't the case that businesses were stockpiling and could afford to move products more slowly. "It's not displacement," Perovic said.

The likely answer was that emerging economies such as China, India and Latin America were now driving global growth and were transporting bulk commodities by sea rather than flying low-volume, high-value goods. The U.S. and Europe have lost their historic dominance and were now responsible for just 9 percent and 7 percent, respectively, of trade growth.

Read Full Article