Air freight volume may have reached bottom

Global- Air freight volumes could possibly have reached the bottom after falling below 20% for three consecutive months, said a top International Air Transport Association (IATA) executive.

According to IATA, international freight volume for February was 22.1% below 2008 levels. Previously freight volumes declined by 23.2% in January and 22.6% for the month of December.

"Freight traffic, which began its decline in June 2008 before passenger markets were hit, has now had three consecutive months in the -22% to -23% range. We may have found a bottom to the freight decline, but the magnitude of the drop means that it will take time to recover," said Giovanni Bisignani, director general and CEO of IATA.

According to the IATA's February report, all cargo markets continued to experience extremely weak demand due to the collapse of international trade in goods and sharp decline in shipment of components by manufacturers. 

Asian carriers saw demand decline by 24.7% as the region's high-value export-dependant industries were badly hit by falling consumer demand in the major markets of Europe, US and Japan. 

However, the recent Eurozone Purchase Managers Indices indicated that the level of air freight appeared to have found a floor over the past three months. Although freight volumes remained in negative territory, it showed a slight and unexpected improvement in the month of March, IATA said.

Bisignani warned that the burden of the crisis requires an industry response.

"This is not just an airline crisis. Efficiency must be a priority for the entire value chain. A 25% reduction in landing charges at Singapore Changi Airport and a 50% reduction at Malaysian Airports are major steps in the right direction. These are model programmes for others to follow," said Bisignani.

Bisignani continued, "The priority for airlines around the world is survival-conserving cash and adjusting capacity to match demand. This means resizing and reshaping the industry to deal with the 12% (US$62 billion) fall in revenues expected this year. Airlines will be making some tough decisions to stay afloat as we head for industry losses of US$4.7 billion in 2009."

Recently, IATA announced that the global air transport industry could lose approximately US$4.7 billion in 2009. This is a significant increase from IATA's prediction of US$2.5 billion in December last year.

"The state of the airline industry today is grim. Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago. Our loss forecast for 2009 is now US$4.7 billion. Combined with an industry debt of US$170 billion, the pressure on the industry balance sheet is extreme," said Bisignani.