How is the Middle East air freight market shaping up in 2017?

Polly Coleman
- Finance - Mar 07, 2017

The International Air Transport Association (IATA) has released data for global air freight markets, showing that demand (measured in freight tonne kilometres, FTKs), rose 6.9 percent in January, 2017 compared to the year before. Even though this figure was down from the 10 percent annual growth recorded in December, 2016, it was still well above the average annual growth rate of three percent over the past five years.

Growth in freight capacity (measured in available freight tonne kilometres, AFTKs), slowed to 3.5 percent in January, 2017.

The continued positive momentum in freight growth into 2017 coincides with a steady rise in new export orders, which reached their highest level in February since March, 2011. There has also been an increase in the shipment of silicon materials (typically used in high-value consumer electronics) shipped by air. The timing of the Lunar New Year (in January, 2017) also may have contributed to higher demand in January.

Alexandre de Juniac (IATA’s Director General and CEO) commented: “It’s been a good start to the year for air cargo. Demand growth accelerated in January, bolstered by strengthening export orders. And that outpaced the capacity growth which should be positive for yields. And, longer-term, the entry into force of the Trade Facilitation Agreement will cut red tape at the borders for faster, cheaper and easier trade. The onus is now on the industry to seize the opportunity to accelerate the modernization of processes to make air cargo an even more compelling option for shippers.”

All regions (with the exception of Latin America) reported an increase in demand in January, 2017.

Middle Eastern carriers’ freight volumes increased 8.4 percent year-on-year in January, 2017 and capacity increased 3.3 percent. Seasonally adjusted freight volumes continued to trend upwards during the first month of the year, supported by an increase between the Middle East and Europe. Despite this, growth has eased from the double-digit rates which were the norm over the past ten years. This corresponds with a slowdown in network expansion by the region’s major carriers.

The positive start to the year will set an optimistic backdrop for the World Cargo Symposium which will gather the air cargo industry in Abu Dhabi, UAE from 14-16 March, 2017.

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