Trade intensity delays air cargo

The volume of European freight traffic in 2019 continues to decline due to the lack of clarity regarding Brexit and the possible exacerbation of trade disputes with the United States.

The slowdown is obvious, despite the fairly good economic performance of the region’s economy, since the risks associated with Brexit and the tense relations between China and the United States, the United States and Europe, force shippers to be cautious. We see that once these risks are eliminated, the volume of freight will be restored again.

According to estimates of RKK, European airlines in February 2019 reduced the demand for freight traffic by 1% compared with last year, which corresponds to weaker production levels in Germany, one of the largest economies in Europe.

The situation may also be ambiguous in the event that the US switches its attention to trade with the EU. Previously, EU subsidies supporting Airbus had a negative impact on American competitors. This led to the fact that the US government has initiated public discussions about its plans to introduce tariffs on imports from Europe in the amount of 11 billion US dollars. If introduced, the tariffs will be aimed at a wide range of European goods, including airplanes, cars, motorcycles, farm products, clothing, watches.

According to analysts of RСC, global air traffic has consistently declined since November last year and in February reached almost a 5% decline.

“Nevertheless, we see that the industry is adapting to new markets, represented by a significant increase in e-commerce and special freight traffic. The market is mainly spot, and trade is subject to strong volatility. Over the past month, prices rose by more than 10%, and then declined by more than 15% in a week. I, like many experts, believe that if the US introduces tariffs on EU goods, the transatlantic air cargo market will almost certainly experience a crisis. Slower growth in freight volumes may become a trend. To date, 25 of the world’s leading markets, only five reported an increase in sales in January-February at an annual rate: Australia, Kenya, Vietnam, Ecuador and the United Kingdom, ”notes Ivan Grishagin, general director of Russian Container Company.

Transatlantic traffic accounts for about 10% of the global air travel market. Most of the volume is shipped to Europe and the Middle East from India and from Southeast Asia, and then shipped to the United States. As a consequence of the Chinese New Year, the largest decline in demand was observed in the Asia-Pacific region in January-February. Outbound traffic in Asia fell by a total of 6.5% year on year in January and February, while imports of air cargo declined by 6%. In addition, demand for air travel by airlines in the Asia-Pacific region also fell by 11% in February compared with the same month in 2018.

According to analysts of RСC, although the volume of January-February is weak for most of the main trading compared to last year, two-month figures in 2019 still look better than in the same period in 2016 and 2017.

However, it will be quite difficult to achieve industry growth by 3-4% in accordance with the forecasts of most experts in 2019.

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