The air cargo industry has been locked in a downward trend. The most recent statistics from IATA show that June was the eighth consecutive month with shrinking traffic, which brought freight-tonne kilometres down 3.6 per cent for the first half of the year.
The contraction has been most painful in the transpacific sector, but every other market except Africa has suffered declines, which reflects a global economic slowdown. With key economies such as China, Germany and South Korea slowing down and the US seemingly poised on the brink of a downturn, demand for air freight is unlikely to pick up momentum in the near term.
The economic outlook is reinforced by uncertainty over trade policies, where further escalations would sharply increase the chance of a global recession. Meanwhile, companies are starting to defer investment decisions while they monitor the situation.
So preparations for the peak are very different to the scramble of a year ago to secure air freight space. Forwarders have shown little interest in signing up cargo charters. Moreover, capacity has been growing, albeit modestly, while demand has shrunk.
According to port authorities and logistics providers in the US, inventory levels are high, as companies had stocked up in anticipation of additional tariffs. In Europe, consumer confidence remains low, with additional unease from the question marks over Brexit.
Under these circumstances, forwarders and airlines are expecting little momentum in the peak season. Some are referring to it as a ‘non-event’, while others reckon that any spike in traffic will be limited and brief. Individual consumer products may cause moderate bursts in demand, but a sustained peak has been widely ruled out.
Indeed, seeing no indication of a recovery in the foreseeable future, Kuehne + Nagel has revised its zero-growth forecast for air cargo growth in 2019 to a contraction of four or five per cent.
Ian Putzger is an aviation and logistics journalist