Global air freight, passenger growth slow amid trade war

A UPS Boeing 757 departs from Vancouver International Airport (photo: Brett Ballah).

A pessimistic picture is emerging for global air freight carriers, as a trade war between the United States and China and uncertainty around Brexit weigh on cargo shipments.

“The US-China trade dispute has continued to weigh upon the world trade outcomes and outlook, evidenced by the weakness in recent activity out of important air freight hubs such as Hong Kong and Shanghai,” reads a report published Wednesday by the International Air Travel Association.

A FedEx Boeing 767 departs Vancouver International Airport (photo: Brett Ballah).

Those headwinds are reflected in cargo data published at Canada’s main Pacific port of entry for air cargo, Vancouver International, which saw volumes decline almost five per cent in the first three months of 2019.

Industry-wide freight tonne kilometres, a key measure for cargo airlines, for April fell by 4.7% compared with their level of a year ago. In North America, cargo figures were almost flat, despite growing capacity.

“Global headwinds are likely to continue to impact air freight outcomes in the coming months, especially with the recent escalation in US-China trade tensions,” says IATA.

At the same time, IATA reported global passenger volumes increased in the first four months of the year, with record load factors being reported. It should be noted that in April, however, the percentage of occupied seats on planes was pushed higher by the world-wide grounding of the Boeing 737 Max after a pair of deadly crashes.

IATA calls the April figures “solid but not exceptional.

“Driven by tariffs and trade disputes, global trade is falling, and as a result, we are not seeing traffic growing at the same levels as a year ago. However, airlines are doing a very good job of managing aircraft utilization, leading to record load factors.” said Alexandre de Juniac, IATA’s Director General and CEO in a statement.

Airlines such as Westjet and Air Canada, which both fly the Max, have had to juggle their schedules by combining flights, and cancelling some routes, to deal with the grounding.

Within Canada, airports continue to report solid passenger numbers, building on a record year in 2018. Year-to-date growth until the end of April at major airports has ranged from a high of 6.5% in Montreal to a low of 1.6% in Edmonton (Toronto and Vancouver have only reported traffic until the end of March).

IATA says domestic growth in the United States is particularly strong, led by a healthy job market. That reality is also reflected in Canada, though both Westjet and rival Air Canada have limited plans for growth within Canada in 2019, choosing instead to focus on the international market.

World-wide, “Over the past six months the annualized growth rate has been a relatively modest 2.6%, a clear slowing from the very strong 9.3% pace of the same period a year ago,” reads the IATA passenger report also published Wednesday.

IATA singled out traffic in the Asia-Pacific region for particular attention, arguing “The slowdown in global trade, including the impact from the China-US trade tensions on the broader region, continue to weigh on passenger demand.”

Again, that slowdown is reflected at Canada’s main Pacific hub in Vancouver, where traffic to Asia increased 5.4% in the first three months of 2019, down from growth of 13.7% and 16.8% in each of the previous two years.