Executive Briefings

Sluggish Air Cargo Market Expected in 2016

As we draw toward a close of a volatile 2015 that saw airfreight demand skyrocket in the early months only to cool down and stagnate for much of the rest of the year, the International Air Transport Association (IATA) is predicting continued sluggishness for most of 2016, thanks to continued weak growth in world trade, a slowdown in China, falling commodity prices, and an expected interest rate hike in the United States.

In its 2016 outlook, IATA does predict that airfreight demand will increase next year by 3 percent, compared to 1.9 percent growth seen in 2015, which slightly ahead of the expected 2.7 percent GDP growth. However, this pace is expected to be muted by changes in today's supply chains. "Prior to the Global Financial Crisis, this pace of economic growth would have generated much faster international trade and air cargo growth, but that pattern of growth appears to have stopped as companies bring supply chains closer to home," IATA said.

The association said the industry is expected to transport 52.7 million tonnes of cargo, globally, in 2016, compared to about 51.3 million tonnes this year. The increase, IATA said, would have been even higher were it not for “a tough global economic environment and feeble world trade” that have conspired to subdue airfreight demand. “Emerging markets have struggled — a slowdown in China has sent commodity exporters wobbling,” the report stated.

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In its 2016 outlook, IATA does predict that airfreight demand will increase next year by 3 percent, compared to 1.9 percent growth seen in 2015, which slightly ahead of the expected 2.7 percent GDP growth. However, this pace is expected to be muted by changes in today's supply chains. "Prior to the Global Financial Crisis, this pace of economic growth would have generated much faster international trade and air cargo growth, but that pattern of growth appears to have stopped as companies bring supply chains closer to home," IATA said.

The association said the industry is expected to transport 52.7 million tonnes of cargo, globally, in 2016, compared to about 51.3 million tonnes this year. The increase, IATA said, would have been even higher were it not for “a tough global economic environment and feeble world trade” that have conspired to subdue airfreight demand. “Emerging markets have struggled — a slowdown in China has sent commodity exporters wobbling,” the report stated.

Read Full Article