Survey finds rising freight capacity will continue to affect yields

Leipzig Halle Airport

Airline heads of cargo forecast ongoing increases in freight capacity will continue to weigh heavily on freight yields over the year ahead.

This was found in the International Air Transport Association’s (IATA) Airlines Business Confidence Index for April 2016, in which it surveyed senior cargo chiefs.

IATA says: “More than one-quarter of respondents reported lower volumes in Q1 (the first quarter) 2016 relative to Q1 2015, in part linked to disruption at US west coast seaports during Q1 2015. The ongoing weak underlying global trade backdrop is taking its toll on expectations of future growth.

“While the weighted average score for freight over the next 12 months ahead remains in positive territory, it has trended down over the past five quarters and is currently at its lowest level since April 2011.”

Respondents in the survey say ongoing strong capacity growth continues to put “acute pressure” on cargo yields and half of them report year-on-year (YOY) decreases in cargo yields in Q1 2016.

IATA says: “One brief foray aside, the weighted average score for yields over the past three months has been rooted in negative territory since the start of 2012. The results of the April survey show that cargo heads increasingly expect further falls in yields over the next 12 months; a combined 93 per cent of respondents expect yields to remain unchanged or to fall further in the year ahead.”

The survey also found expectations of further gains in profitability over the year ahead have eased markedly in recent surveys, as yields have come under strong downward pressure and expectations of future cost reductions have diminished and April’s survey results are in keeping with the mixed start of the year for air cargo.

IATA says long-run expectations for growth remain positive for cargo businesses, although expectations of the latter have moderated since the start of 2015 as “structural headwinds” – notably the ongoing weakness of global trade growth – have risen to the fore.