Asia Pacific – Air Freight Services to Face Decline in Demand

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Recently, Association of Asia Pacific Airlines (AAPA) conducted a survey on air freight market taking freight services performance in the month of July as the main base. According to their report, air freight market belonging to Asia Pacific region displayed flat performance which is mainly due to the slowdown in activities of world trade market and reducing demand for the exports belonging to Asia Pacific region. Although considerable growth is seen in air cargo market of Asia Pacific and the Middle East, a flat decline is noticed in the demand. This flat decline in demand is seen due to the impact of the economic growth slowdown in China, noticed from the past few months. From the recent traffic report of AAPA, it is seen demand has declined by 2.2 percent compared to previous standing at 5.35 billion, whereas, previous year it is recorded as 5.4 billion. In addition, available capacity measured in freight tonne kilometers is increased by 2.9 percent with 8.39 billion, which was recorded as 8.63 billion last year for the same period.

Although this yearly report depicting growth, 3.2 percent decline is seen in the average load factor of freight services. While the average load factor of freight services in 2014 was recorded as 62.1 percent, in the month of July. Starting this year, air freight services initiative was good with considerable growth in demand. But slowly, freight services lost their momentum due to global trade slowdown and reduction in demand of exports, especially Asian exports. For the first half of the year, freight services belonging to Asia Pacific region reported 3.5 percent hike in international air cargo demand which is recorded as 5.3 percent hike in 2014 for the same period, said by Andrew Herdman, director general of AAPA. He added that, although demand for freight services declined, air travel demand was in good growth. Weak cargo market shows its impact on economic conditions which include growth slowdown in China, tumbling currency values, stock market collapse. All these factors will affect the business growth and consumer demands will go forward.

This year, FTK values recorded every month depicted mixed results like rise and fall phenomena. In January, FTK recorded as 5.1 billion, while, in February, it is declined to 4.8 billion. In the month of March, FTK recorded 5.9 billion which declined to 5.3 billion in April. In May, a slight increase is noticed in FTK recorded as 5.4 billion. Consequently, in the month of June, hike continued recording 5.34 billion and continued hike further in the month of July. According to the report, the average FTK recorded by freight services belonging to Asia Pacific region was high in the month of July compared to remaining months of the same year. According to the recent report, the average FTK recorded in January was 8.3 billion and in February, it is recorded as 7.4 billion with some decline. While in the month of March, a slight increase is seen in AFTK with 8.6 billion whereas, in April, it declined slightly standing at 8.4 billion. Consequently, in May, average FTK increased slightly standing at 8.5 billion. Further, it got declined to 8.3 billion in June. But in July, average FTK value increased more compared to all the monthly records it is termed to be the highest record of the year. If first seven months results are compared, a remarkable rise is seen in demand. FTK value increased by 3.5 percent to 37.3 billion, whereas, AFTK increased by 4.5 percent to 58.5 billion. At the same time, average freight load factor was recorded as 63.9 percent which declined by 0.6 percent compared to 2014. Declined oil prices and focusing more on cost savings and operational efficiencies are some positive aides followed by Asia-Pacific freight services to achieve profits.

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