Global air freight capacity outpaces demand in June, says IATA report

GLOBAL airlines registered a 1.7 per cent growth in air freight capacity in June compared to the same month last year, while carrying 0.8 per cent more cargo, reflecting continued weakness in the market, according to the International Air Transport Association (IATA).

Cargo demand rebounded 2.5 per cent since the 2011 fourth quarter decline, offset by a surge from Middle East and African carriers, which posted June increases of 17.9 per cent (Mideast) and 15.9 per cent (African) year on year.

Mideast and African carriers also increased capacity in June, offering 14.2 per cent (Mideast) and 12.1 per cent (African) more freight space year on year, IATA reported.

North American carriers also saw slight cargo growth during the month despite slashing capacity by one per cent and the airlines saw a 1.8 per cent increase in freight traffic in June compared to the same month last year - a testament to heightened consumer demand in the US.

On the other hand, the economic slowdown in China and India impaired cargo demand in June with traffic plummeting three per cent on a 1.3 per cent capacity reduction in the Asia-Pacific.

Latin American and European carriers also posted declines in June with cargo demand slowing 1.4 per cent in Latin America and 1.8 per cent in Europe year on year.

Despite these drops, airlines in both regions increased cargo capacity in June, although the discrepancy between capacity and demand was much more dramatic in Latin America. IATA said that Latin American carriers increased capacity by 12.5 per cent during the month while European carriers offered 1.8 per cent more freight space than in June 2011.

"The uncertainty that we see in the global economic situation is reflected in air transport. It is difficult to detect a strong trend - positive or negative - at the global level," said IATA director general Tony Tyler, former CEO of Hong Kong's Cathay Pacific Airways.

"Passenger markets have been growing more slowly since the beginning of the year and freight markets gains have been mostly very weak," Mr Tyler said. "The net effect is a demand limbo as consumers and businesses hedge their spending while awaiting clarity on the European economic front."