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Global air freight demand still flying high

Geneva – The freight demand of African carriers increased by 7.4% in October 2016 compared to October 2015, according to the latest data released by the International Air Transport Association (Iata).

International freight demand for African airlines slowed in October, compared to October last year. According to Iata it still remains at what it calls a robust 7.7% year-on-year.

At the same time, the capacity of African carriers increased by 24.7% in October 2016 compared to October last year. Iata said this is mainly due to long-haul expansion by Ethiopian Airlines. The airline has introduced additional new long-haul wide-body jetliners during the month in review.

Iata’s latest data shows that global air freight demand in October rose 8.2% year-on-year. This was the fastest pace of growth in 18 months. At the same time freight capacity increased by 3.6% over the same period.

According to Alexandre de Juniac, Iata’s director general and CEO, global air freight markets look set to end 2016 on a high note as demand is growing at its fastest pace in 18 months.

“It remains to be seen how long this growth trend will endure after the year-end peak period and we still face headwinds from weak global trade,” he said at Iata’s Cargo Media Day.

“But there are some encouraging signs. The peak has been stronger than expected. And purchasing managers are reporting a pick-up in new export orders. So we will enter 2017 propelled by some much-needed positive momentum.”

According to Iata, there are some once-off factors to take into account, which are likely impacting October’s positive air freight results. These include what it describes as a potential modal shift to air cargo following the collapse of the Hanjin Shipping Company in August. Iata also expects that there could be some last minute reliance on air transport as companies exercised caution in ordering as a result of weak market conditions earlier in 2016.

Iata further pointed out that structural market shifts are also likely underpinning a portion of the stronger performance, including strong growth in cross-border e-commerce and pharmaceutical flows.

Furthermore, preparation for the increasingly popular sales events like Black Friday and Cyber Monday may, in Iata’s opinion, also have contributed to the increased demand peak for air freight.

De Juniac said the drivers of stronger growth are sending a major signal for change to the air cargo industry.

“Whether it is e-commerce or the trade in pharmaceuticals, shippers are demanding more than current paper processes can support,” he explained.
“The shift to e-freight is more critical than ever.”

According to Celine Hourcade, Iata’s head of cargo transformation, the association’s programme to simplify the business of cargo is about making air cargo more modern in terms of distribution. It aims to capitalise on e-commerce and to optimise the end-to-end journey. It is about a move to data on demand and developing real-time interaction.

“It is about making air cargo easier, smarter and faster,” she said. “In the process inter-active cargo becomes very important.”

Glyn Hughes, Iata’s head of cargo, added that Africa, the Middle East and certain parts of Asia are actually ahead of Europe and the Americas when it comes to e-cargo penetration. He said the aim should be to have the freight process be 100% paperless.

Ariaen Zimmerman, Iata’s executive director of Cargo IQ, said the industry is actually looking for control of the shipping process more son than for speed. That is why he sees many opportunities in the performance process.

In Africa this would have to mean more efficient cross border processes in order to make use of these opportunities, said Hughes.

* Fin24 is the guest of Iata at its Global Media Day.

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