News / Supply chain bottlenecks could be a bonus for buoyant air freight sector

© Khunaspix Dreamstime.

Air freight volumes jumped some 8% in January and, while Chinese New Year may have distorted year-on-year figures, analysts believe the drivers of growth remain buoyant.

IATA’s air freight market analysis shows a month-on-month increase from the last part of 2017, and suggests “rising bottlenecks” within the supply chain would likely ‘benefit air freight over other modes of transport”.

It says: “Longer supplier delivery times have been consistent with rising demand for air cargo … as firms have turned to the speed of air freight to recover some of the lost time out of their production processes.

“This certainly looks to have been a key factor behind the strong pick-up in air freight demand since mid-2016.”

However, IATA notes reports suggesting bottlenecks in the supply chain may be most acute in capital goods – particularly steel – which could limit the benefit to air freight.

But should export orders remain buoyant, growth would be “solid if not spectacular”, at about 5% by the end of the first half – in line with the five-year average.

“As always, the shifting timing of Chinese New Year can distort annual growth rates at the start of each year,” says the report. “We will have to wait until we have February data to get a more complete picture of the strength of freight demand during the opening months of 2018.”

The impact of Chinese New Year aside, demand for capacity grew at almost twice the rate that was available in January, up 8.6% compared with 6.7% in 2017.

African carriers also showed their might, claiming the 16^th busiest month in 17 compared with other regions, with growth of 12.9% year-on-year.

“African airlines’ freight volumes have been boosted by a strong upward trend in traffic between Africa and Asia” the report says. “This segment grew 59% in 2017, following an increase in the number of direct services between Asia and Africa on the back of ongoing investment flows into Africa from Asia.”

Conversely, Middle Eastern carriers continued to stagnate, with IATA stating the region continued to be outperformed by the rest of the world.

The full report is available here.