Air cargo demand nosedives

Global - The Association of Asia Pacific Airlines (AAPA) and The International Air Transport Association (IATA) have both announced a steep fall in international air cargo volume for the month of November 2008.

AAPA said November was the seventh consecutive month of accelerating declines as airlines cut capacity due to weak demand.

International cargo volume declined 15.5% in November, from 5.1 billion freight ton kilometres (FTK) in the same month in 2007 to 4.3 billion FTK in 2008. Even with an 8.9% reduction in cargo capacity, the average international cargo load factor for November fell by almost five percentage points to 64.3%, said AAPA.

Andrew Herdman, director general of AAPA said, "The dramatic slowdown in global economic activity in the second half of the year is now reflected in sharply weaker demand for cargo shipments."

Herdman added, "The recent plunge in oil prices provide a measure of relief, but market conditions are expected to remain extremely difficult moving into 2009, forcing airlines to adopt additional cost-saving measures, including capacity cutbacks and deferral of planned capital expenditures," he said.

According to the IATA, international cargo traffic dropped 13.5% in November 2008. This was the largest decline the association has reported since 2001.

"The 13.5% drop in international cargo is shocking," said Giovanni Bisignani, IATA's director general and CEO. "As air cargo handles 35% of the value of goods traded internationally, it clearly shows the rapid fall in global trade and the broadening impact of the economic slowdown."

Asia-Pacific carriers were hit the hardest, with a 16.9% decline in traffic. Asia-Pacific carriers hauled 44.6% of global freight and freight accounts for a larger percentage of revenue for them said IATA.

Profits in the region are expected to be heavily affected in the fourth quarter.

Latin America, North America and Europe also saw double-digit freight declines at -15.75%, -14.4% and -11% respectively

"With no end in sight for the worsening global economy, the 2008 gloom will carry over into the new year," Bisignani said.