2014 was a good year for Middle East air cargo demand

2014 was a good year for Middle East air cargo demand

Air cargo demand up

Iata reports growth in demand but cautions there are no immediate prospects for arresting declines in yields

March 2015

Middle Eastern air carriers reported strong growth in cargo demand in 2014, expanding 11.3 per cent last December and 11 per cent for the year as a whole. However yields declined indicating challenges remain to enhancing the value proposition.

An International Air Transport Association (Iata) report also said the region’s airlines extended their networks and grew capacity by 11.1 per cent making the Middle East a hub for freight traffic. They were credited with having more than a 37 per cent share of the global increase in freight capacity in 2014.

The global air cargo sector witnessed growth of 4.5 per cent in 2014 compared with the previous year, measured by freight tonne kilometres (FTKs) – a significant acceleration from the 1.4 per cent recorded in 2013 over 2012, Iata said.

Air cargo market expansion gathered momentum as 2014 progressed. The year finished on a positive note, with growth in December accelerating by 4.9 per cent, compared with December 2013. The vast majority of the growth in 2014, however, was in the Asia-Pacific and Middle East regions, which respectively contributed 46 per cent and 29 per cent of the expansion in FTKs. Growth was recorded in all other regions, but was particularly weak in Latin America.

“After several years of stagnation, the air cargo business is growing again. This is largely being driven by the uptick in world trade over the second half of 2014. Recent concerns over the health of the global economy and a corresponding fall in business confidence have not yet impacted air cargo. But it is a downside risk that will need to be watched carefully as we move through 2015,” said Tony Tyler, Iata’s director general and CEO.

“Despite the improving growth trend, big challenges remain. Yields declined for the third straight year in 2014, with no immediate prospect of improvement. Cargo revenues remained basically unchanged at $62 billion, some $5 billion below their 2011 peak. To move forward, the industry is focusing on providing a stronger value proposition to meet evolving customer needs. That’s what is driving efforts such as cutting shipping times, ensuring high-quality handling of temperature-sensitive goods, or benchmarking quality to improve customer transparency. It’s all about delivering value as a supply chain with a strong vision of the future,” said Tyler.

This focus on value is delivering change. For example, in 2014 electronic air waybill penetration reached 22 per cent and airlines are targeting 45 per cent penetration by the end of 2015.

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