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Middle Eastern carriers saw lesser traffic in September, says Iata

September 2017 saw an 8.9% increase in year-on-year freight volumes for Middle Eastern carriers, with capacity increasing 2.6%, marking a slowdown in demand from the previous month, said the International Air Transport Association (Iata).

A short-lived weak patch in demand in Q3 2016 has meant that recent months have produced volatility in the year-on-year growth rate, Iata said in its latest Air Freight Market Analysis.

Seasonally-adjusted international freight volumes, however, have continued to trend upwards at a rate of 8% over the past six months. Still, strong competition, particularly on the Asia-Europe route, means that Middle East carriers are not seeing as healthy a pickup in the seasonally-adjusted traffic trend as carriers in other regions.

African carriers posted the largest year-on-year increase in demand of all regions in September 2017, with freight volumes rising 17.7%. This is a slowdown from August but still more than twice the five-year average growth pace of 8.9%.

Capacity increased by 2.6% over the same time period. Demand has been boosted by very strong growth on the trade lane to and from Asia which increased by more than 67% in the first eight months of the year. However the upward trend in seasonally-adjusted volumes has flattened in recent months.

Globally, air freight demand (measured in freight tonne kilometres or FTKs), rose 9.2%compared to the same month in 2016. This was the slowest pace of growth seen in five months. However, it was still significantly higher than the five-year average growth rate of 4.4%. Freight capacity (measured in available freight tonne kilometres or AFTKs), rose by 3.9 % compared to September of last year —less than half the pace of demand growth. This is positive for industry load factors, yields, and financial performance.

It appears that the industry has passed a cyclical growth peak. The upward trend in seasonally-adjusted freight volumes in Q3 has eased and the inventory-to-sales ratio in the US is now trending sideways. This indicates that the period when companies look to restock inventories quickly—which often gives air cargo a boost—has ended.

Alexandre de Juniac, Iata’s director general and CEO, commented: “Demand for air cargo grew by 9.2% in September. While that’s slower than in previous months, it remains stronger than anything we have seen in recent memory. But there are signs that this demand spurt may have peaked. So it becomes even more important to reinforce the industry’s competitiveness by accelerating the modernization of its many antiquated processes.”

With year-to-date demand growth of 10.1%, the Iata forecast of 7.5% growth in air freight demand for 2017 appears to have significant upside potential even if the peak of the economic cycle has passed.

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