Slower demand growth emerging in Asia Pacific

Asia Pacific demand last month was dampened by a reduction of e-commerce parcels to Europe, although sustained volumes of AI-related goods helped airlines achieve a healthy year on year growth margin.

Preliminary August traffic figures released by the Association of Asia Pacific Airlines (AAPA) found that international air cargo demand, as measured in freight tonne kilometres (FTK), grew by 1.1% year on year.

This reflected a slower emerging pattern of growth since the EU ended the de minimis exemption on 1 July. Demand growth was up 1.1% year on year for July.

In comparison, there was a 4.1% increase in April, a 2.5% increase in May, and a 3.2% increase in June. However, the peak season is expected to bring with it renewed demand.

The AAPA said that “air cargo markets continued to benefit from rising export activity and brisk demand for AI-related goods, although e-commerce shipments to Europe showed some weakness following the introduction of charges on small parcels”.

Meanwhile, offered freight capacity expanded by 1.6%. As a result of the demand and capacity changes, the average international freight load factor fell by 0.3 percentage points to 59.3% for the month.

Wong Hong, director general of AAPA, said that international “air cargo demand rose by a strong 5.5%”over the first eight months of the year,

However, he added that elevated jet fuel prices, airspace restrictions and weaker Asian currencies are raising costs, meaning airlines have faced profitability challenges. Airlines also have to contend with geopolitical developments and changes in trade policies.

Despite this, Hong said regional economic growth and trade activity should continue to support air cargo demand “although growth is likely to remain uneven across markets”.