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Global Air Freight Reduced To 2.2% In 2015- IATA Report

Global Air Freight Reduced To 2.2% In 2015- IATA Report

The International Air Transport Association (IATA) has released figures for global air freight markets showing cargo volumes measured in freight tonne kilometers (FTKs) reduced to 2.2% in 2015 as compared to 2014. This was a slower pace of growth than the 5.0% growth recorded in 2014. The weakness reflects sluggish trade growth in Europe and Asia-Pacific. After a tough start, air freight volumes began a decline that continued through most of 2015, until some improvements to world trade drove a modest pick-up late in the year.

Cargo in Asia-Pacific, accounting for around 39% of freight traffic, expanded by a moderate 2.3%. The key markets of Europe and North America, which between them comprise around 43% of total cargo traffic, were basically flat in 2015. Latin America suffered a steep decline (-6.0%) while the Middle East grew strongly, up 11.3%. Africa also saw modest growth of 1.2%.

The freight load factor (FLF) was at times the lowest for some years, falling to an average 44.1% compared to 45.7% in 2014, driven down by weak demand and capacity expansion.

2015 was another very difficult year for air cargo. Growth has slowed and revenue is falling. In 2011 air cargo revenue peaked at $67 billion. In 2016 we are not expecting revenue to exceed $51 billion. Efficiency gains are critical as the sector adjusts to shortening global supply chains and evermore competitive market conditions. We have to adjust to the new normal of cargo growing in line with general rates of economic expansion. The industry is moving forward with an e-freight transformation that will modernize processes and improve the value proposition. The faster the industry can make that happen, the better, Tony Tyler, IATA s Director General and CEO said. The industry s key challenges will be discussed in detail at the World Cargo Symposium (WCS) in Berlin, 15-17 March. The world s largest gathering of air cargo professionals, the 10th WCS will bring together 1,000 delegates under the theme of The Value of Air Cargo to debate solutions for strengthening air cargo and the vital service it performs for the world economy.

Regional Analysis In Detail

The global freight growth rate in December was 0.8% compared to December 2014. Within that range there were considerable regional fluctuations. African airlines FTKs declined by 8.4% in December although for 2015 as a whole the region grew by 1.2%. The FLF in 2015 was 29.7%, the lowest of any region.

The underperformance of the Nigerian and South African economies was a challenge throughout the year, but trade growth to and from the region was sufficient to drive a modest expansion in FTKs. Asia-Pacific carriers were basically flat in December, expanding just 0.1%. For the whole of 2015, the region grew 2.3%. The FLF for 2015 was 53.9%, the highest of any region. Cargo expansion in the region has been hampered by a shift in Chinese economic policy to favour domestic consumption.

A mid-year fall of 8% in trade to/from emerging Asia also led to declines but this appears to have bottomed out, with a rebound in the second half of the year. European airlines grew by 1.2% in December but the performance for 2015 in total was a fall of 0.1% compared to 2014. The FLF in 2015 was 44.9%. Economic conditions in the Eurozone have been subdued, leading to suppressed demand for air freight, but imports have improved in recent months.

Latin American carriers continued the weak performance of recent months, declining by 6.2% in December and by 6.0% for 2015 as a whole. This was the weakest performance of any region. The average FLF for 2015 was 38.3%. Economic and political conditions in Brazil have worsened, and regional trade activity has been volatile. Middle Eastern carriers grew 4.0% in December and for 2015 in total the region expanded 11.3% compared to 2014. The FLF was 42.8% for 2015.

The region enjoyed a strong year as network expansion into emerging markets was supported by economic growth in local economies. Political instability and the fall in the oil price may impact on some economies in the region but growth as a whole remains robust enough to support further expansion in 2016. North American airlines saw FTKs expand 1.4% in December compared to December 2014. For the year as a whole, North America grew just 0.1%.

The 2015 FLF was 34.3%. Growth in 2015 faded after a strong start that was flattered by the West Coast ports strike.

Recently there have been mixed signals from economic data, indicating an doubtful outlook for air freight in the coming months.

Kenya Set To Boost Agric Output With Dutch Partnership

Kenya Set To Boost Agric Output With Dutch Partnership

Kenya s agriculture sector, which currently contributes 15 percent to the country s GDP, is set to increase its output with the country s planned collaboration with The Netherlands government. This is as the two economies, which have enjoyed mutually beneficial cooperation in the past, have resolved to move away from aid development and focus instead on trade.

As the Dutch embassy, we have taken a decision that the country, as a lower middle income country, is not best served by handouts; we feel that our relationship with Kenyans should be more mature to move from being a donor recipient to a trading partner, said Melle Leenstra, Food and Security Development Adviser, Netherlands Embassy.

We are trying to improve Kenya s horticulture sector in three thematic areas. We want to help with food safety through correct use of pesticides, reduction of post-harvest losses and also help small to medium farmers to gain access to markets, he said. Leenstra said the Dutch spend about ‘ 5 million annually in the Kenya s agriculture sector and hoped that through this investment the two economies would build sustained relations and create deeper impact, adding that the two countries were combining trade and development to ensure interests of both parties are met. Kiringai Kamau, adviser to Kenya s Ministry of Agriculture, Livestock and Fisheries, said the movement from aid to trade meant stopping development support through concessions and rather doing inter-trade between the two countries.

The Dutch government has been supporting the Kenyan government through aid; they want to move that to ensure it supports the country through trade. Dutch enterprises will be supported and facilitated by their country, he said, adding that the Kenyan government was committed to making sure that doing business in Kenya is smooth.

Kenya s central location in East Africa has been attractive to Dutch investors over time. In 2011 the volume of trade (total imports and exports) between Kenya and the Netherlands was more than ‘ 852 million, up from ‘ 700 million in 2010. Important Dutch export products are services, chemicals, machinery, transport equipment and engines while major imports from Kenya are horticultural products, flowers, tobacco and raw materials. The Netherlands is the third export market for Kenya. Dutch private investment in horticulture has led to the emergence of a large competitive horticultural industry (flowers and vegetable production) which contributes to more than 14 percent of Gross Domestic Product (GDP). In recent years, there is growing Dutch investment outside the traditional horticultural sector, e.g., renewable energy, water and sanitation, infrastructure, logistics, ICT, and financial services. Stefan Engels, Team Leader at Hortimpact, said partners within the agricultural sector were doing their part. He therefore called on the government to create an enabling environment.

The government can do a lot in creating an environment that allows easy investment and business, he said.