Transportation

Air cargo industry braces for worst year since financial crisis as holidays fail to perk up demand

Key Points
  • Air cargo demand continued to fall, even as the peak holiday season began, IATA data shows.
  • The Asia-Pacific and Middle East regions posted the biggest declines in October.
  • Air cargo capacity growth has outstripped supply for the last 18 months.
An Iceland Air Cargo 757 being unloaded in Reykjavik, Iceland.
Christian Van Grinsven | SOPA Images | LightRocket | Getty Images

The peak holiday season started off with a thud for cargo airlines, as demand continued to fall short of supply, amid slowing global growth and a trade war that continues to weigh on the sector.

Air cargo demand fell 3.5% in October, the start of the peak season when companies are stocking up inventory for the holiday shopping season, compared with a year ago, marking the 12th consecutive month of declines, the International Air Transport Association said Wednesday.

The U.S.-China trade war, generally slowing trade, and weakening economic growth are weighing on demand and setting up air freight volumes this year to be the weakest since the financial crisis, said the IATA, a trade group that represents most of the world's airlines.

"Air cargo's peak season is off to a disappointing start," Alexandre de Juniac, director general of the IATA and its CEO, said in a release. "It has been a very tough year for the air cargo industry."

Air cargo capacity has outpaced demand for 18 months, the IATA said. The Middle East and Asia-Pacific regions posted the sharpest declines, 3.5% and 3.3%, respectively. Europe demand fell 2.3% from October 2018, while demand in North America dropped 2.2%. Latin American volumes fell 1.9%.

The industry and investors are eager to see if the U.S. and China can reach a trade agreement with on-again, off-again signals of an upcoming deal.

The Dow Jones Industrial Average fell sharply on Tuesday after President Donald Trump said it may be better to wait until after the 2020 presidential election before striking a deal with China. Stocks recovered on Wednesday after a report that Washington and Beijing were moving toward a deal.

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Key Points
  • Air freight volumes fell nearly 5% in June, the eighth consecutive month of declines.
  • Freight airlines say demand has dropped amid the worsening trade war between the U.S. and China.
  • Economists and executives are trying to assess the health of the economy amid conflicting signals.