Whither the peak season?

With the latest statistics out from both the International Air Transport Association (IATA) and the Association of Asia Pacific Airlines (AAPA) confirming what has been more and more evident with each passing month to the air cargo industry, it looks as if the lethargy in global air cargo markets is set to remain until at least early next year with the traditional peak season gone the way of the Dodo bird, at least for this year.


AAPA IATA


Whither the peak season?

With the latest statistics out from both the International Air Transport Association (IATA) and the Association of Asia Pacific Airlines (AAPA) confirming what has been more and more evident with each passing month to the air cargo industry, it looks as if the lethargy in global air cargo markets is set to remain until at least early next year with the traditional peak season gone the way of the Dodo bird, at least for this year. September figures point to an ongoing slide in freight volumes that began in the secondquarter this year, picking up speed with each passing month. By September volumes were five per cent below those carried at the end of the first quarter, a direct result of deteriorating trade and economic conditions as a result of economic turmoil in a number of European economies and a limp US economy. As IATA notes in its update, inventory to expected sales ratios have risen leading to shipments by air being cut. But even on the ocean side there’s nothing to cheer about, as container shipping lines are also in the same proverbial boat, with excess capacity and a serious lack of demand. Take Singapore’s Neptune Orient Lines – one of the world’s most closely watched shipping lines – who at the end of October posted a US$91 million loss for the third quarter on rates per 20-foot container that were down 19 per cent year-on-year and by no means alone in the industry. September volumes for global air cargo carriers were down 2.7 per cent year-on-year, representing a further worsening from August’s decline of 2.4 per cent. For Asia Pacific air cargo carriers the decline has been even greater than the world’s other regions, with volumes down 6.3 per cent for the month of September compared to the same month 2010. European carriers somehow recorded a contraction of only 2.4 per cent despite the ongoing problems in the Euro zone and North American carriers saw flat freight traffic. The one thing odd with September’s statistics is the fact that passenger traffic continues to strengthen – up 5.6 per cent globally compared to the same month last year. While air cargo is always the leading indicator, five consecutive months of cargo declines seems to indicate a drop in passenger traffic is overdue. Both IATA and AAPA are forecasting a coming softening, saying the unusual buoyancy in passenger numbers could be a result of robust conditions in emerging markets distorting the global picture, along with advance travel bookings made earlier in the year when there was more economic optimism. But for the continuing cargo decline, this all points to the ongoing reliance of exports from the emerging economies to the developed ones in Europe and North America and the as yet sufficient cross trade between emerging economies, despite the enthusiasm and optimism for the burgeoning intra-Asian trade, for instance. Hopefully one day soon we will see a situation where there is a sufficient depth of economic activity east-west rather than solely the traditional north-south pattern that will help cushion the impact of economic problems in one part of the globe or another. In the meantime, fingers crossed for a rosier economic outlook in the early months of 2012.