JEDDAH — Airlines in the Middle East region contributed over 64 percent of the increase in worldwide airfreight capacity in the 12 months to November, as they added aircraft to their fleets – as a result load factors in this region declined, IATA Air Freight Market Analysis in November 2014 said. Middle East airlines have been responsible for carrying 38 percent of the increase in freight ton kilometers (FTKs) over the 12 months to November. Trade has been increasing with Middle East economies but a large part of the airlines business is due to their success at attracting airfreight to go through Middle East hubs, the report noted. Concerns have been rising about the health of the global economy at the start of 2015, and business confidence has weakened. But there was little sign of major cause for concern in the November airfreight data, it said. IATA said the continued growth reflected the broader acceleration of world trade that began in mid-2014. Weakness in airfreight is usually one of the first signs of economic weakness. Growth did slow in November, but not by much. Air freight volumes FTK flown were up 4.2 percent in November compared to a year ago. This was down on October's 5.4 percent but the year-on-year growth reduction was the effect of a strong monthly rise in November 2013. As the first chart below shows, the market expanded from October to November at a solid pace. During the first half of 2014, airfreight volumes and world trade overall went through a weak patch, but there was a marked acceleration during the second half of last year. Notably, this improvement in cross-border trade during the past six months has taken place while domestic industrial production growth remained stable. As the second chart below shows the acceleration in the second half of 2014, of world trade relative to domestic production, comes after several years of interruption to the previous upward trend. This flat-lining of the trade-production ratio has been bad news for demand for air freight in recent years, dampening the strength of the cyclical upturn in air freight last year. It is too soon to say whether the last half-year signals a diminution of the adverse impact of recent on-shoring and trade protectionism, but it is certainly a development worth watching. The air freight upturn has not been evenly spread, with over 90 percent of November's 4.2 percent year-on-year growth carried by airlines in just two regions: Asia Pacific (55 percent of the growth) and the Middle East (38 percent). African airlines experienced the second strongest year-on-year growth rate in November, but carry only a small part of the world's airfreight and moreover their growth has been slowing. The two regions of recent strength in trade have been the US and Emerging Asia. Other regions remain relatively weak. There have also been special factors which have influenced the data, such as congestion at US West coast ports that led to some temporary switch to air and the sanctions on Russia which have affected trade flows in goods. — SG
