Global air freight traffic in 2014 expanded by 4.5 per cent compared to 2013, while expansion in freight volumes continued in January compared to a year ago although at a more subdued pace of 3.2 per cent, a report said.

Growth in global trade volumes has continued to expand, with mirrored increase in FTKs (freight-tonne-kilometres), added the Cargo Analysis for Q1 2015 release by the International Air Transport Association (Iata).

Report highlights:
•    Business confidence continues to signal expansion in manufacturing activity but with dampened expectations, according to the report.

•    Demand drivers for consumer confidence remain positive across key markets, although in Europe pessimism still prevails but there are signs of significant improvement in expectations.

•    Freight capacity addition in 2015 will be driven by delivery of wide body passenger aircraft, for every one tonne of hull capacity added by a wide body freighter three tonnes will be added by wide body passenger aircraft.

•    The difference between sea and air freight rates has largely remained unchanged over the past year. A key development to watch in 2015 is how the new Silk Road rail link from China to Europe will impact modal choice and trade dynamics on this important trade lane.

•    The recent decline in yields are consistent with the continued weakness in load factors but may also partially be explained by a decreasing cost base with the drop in jet fuel prices.

•    If lower fuel prices persist it will boost demand for air cargo services but favourable impact on financial performance of the cargo business will only be achieved if coupled with capacity discipline.
Overcapacity has resulted in lower load factors and has placed downward pressure on yields. Lower jet fuel prices may provide temporary relief to some carriers but are not expected to have a lasting impact on cargo business profitability as jet fuel price reductions will be passed on to consumers.

If lower jet fuel prices persist it will help boost demand for air cargo services but favourable impact on financial performance on the cargo business will only be achieved if coupled with capacity discipline.

Underlying economic demand drivers remain positive and business confidence continues to signal expansion in manufacturing activity but with dampened expectations. Risks remain high as deepening of the Russian-Ukraine crisis, uncertainty in oil price, turmoil in the Middle East and continued concerns around sovereign debt of EU member states weigh on confidence.

However, continued positive demand for air-freighted commodities, as indicated by expansion in semi-conductor shipments, are a potential source of optimism for the year ahead.

The global economy is expected to grow faster in 2015 than at any point since 2010. However, the forecast growth rate of 2.8 per cent is lower than was expected in mid 2014, the report highlighted. – TradeArabia News Service