Air Cargo Demand Increases Causing Asian Capacity Crunch
Air Cargo Demand Increases Causing Asian Capacity Crunch 2017-04-07
The International Air Transport Association (IATA) released demand growth results for global air freight markets for February 2017 showing an 8.4% increase in demand measured in freight tonne kilometers (FTKs) compared to the same period last year. After adjusting for the impact of the leap year in 2016, demand increased by 12% -- almost four times better than the five-year average rate of 3.0%.
Freight capacity, measured in available freight tonne kilometers (AFTKs), shrank by 0.4% in February 2017.
The continued growth of air freight demand in 2017 is consistent with an uptick in world trade which corresponds with new global export orders remaining at elevated levels in March.
"February further added to the cautious optimism building in air cargo markets. Demand grew by 12% in February—about four times the five-year average rate. With demand growing faster than capacity, yields got a boost. While there are signs of stronger world trade, concerns over the current protectionist rhetoric are still very real," said Alexandre de Juniac, IATA’s Director General and CEO.
When demand outstrips capacity by a wide margin, something has got to give; the market for air cargo is suffering from shock.
Milgram’s Indian agent reports that recent weather events in the USA and Gulf States, as well additional cargo related to an increase in shipments related to the traditional end of the Indian financial year, have only exacerbated problems and caused a major space situation that is hitting South Asian carriers especially hard.
Airlines who have been struggling recently to make their financial ends meet are taking the opportunity to increase prices by over 40% as the load demand continues to mount. Freight forwarders and shippers alike are confronted with escalating costs and an increasing scarcity of space.
We have been assured by our agent that they are trying everything possible to service existing business and satisfy the needs of Milgram’s clientele.
Milgram are working closely with our agents and carriers and will keep you posted on our progress as well as the continuing impact of this situation.
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