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Air Cargo Upturn 'Fragile' Says Industry Group

The economic recovery needs to broaden out from an inventory cycle to stronger consumption and business investment IATA says.

An upturn in air cargo demand this year has been driven by companies restocking inventories which have run low, industry group International Air Transport Association (IATA) said last week.

But this pick up would remain "fragile" as long as economic recovery is driven by the inventory cycle, and not by increased consumption and business investment, IATA added.

Air freight demand fell 11.3% in July, improving from the 19.3% average plunge recorded for the first seven months of the year.

IATA noted that the pick up in air cargo began from December, half a year ahead of the recovery in world trade which only began in June. This pattern was already registered in 2002, when the global economy regained its footing following the September 11, 2001 terrorist attack.

"As manufacturers anticipate economic recovery time becomes more important and so inventories are restocked by air at the expense of ocean freight," it explained. "However, the upturn remains fragile until the economic recovery broadens out from an inventory cycle to stronger consumption and business investment," it added.

IATA also said it was unclear if inventories had indeed run to the bottom, given that consumer and business spending have not picked up. "This could for a time limit the strength of the upturn in air freight," it said.

It believed that the average decline in air cargo revenues would reach 25% for 2009, improving from the plunge of an average 35% in the first half.

Copyright Agence France-Presse, 2009

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