Cargo growth slows to a crawl

Global - The recent earthquake in China may have caused global cargo growth rates to slip to 1.3% in May, the International Air Transport Association (IATA) said.

Cargo demand dropped considerably to 1.3% in May, primarily from a 0.5% contraction in Asian carrier traffic. The IATA said this resulted from both the impact of the earthquake in China and the weakness in the Japanese economy.

Asian carriers suffered from a weakness in transpacific markets with increased competition from US carriers who were benefiting from the weak US dollar, the report said.

IATA director general and CEO Giovanni Bisignani said the figures were also a result of skyrocketing fuel prices. "The high price of oil is reshaping the industry," he said. "The major shifts in traffic flows experienced during May reflect this."

"Jet fuel margins are increasing the impact of skyrocketing oil prices for the aviation industry," he added. "Unit costs are up 20%-30% and that is going to take its toll on the bottom line."

Jet fuel averaged US$160 per barrel in May, 87% higher than the same month a year earlier.

"Efficiency everywhere is the imperative. That must be understood by governments, labour and our industry partners," Bisignani said.

The IATA said demand for the full year of 2007 grew 4.3%.