World Air Cargo Shipments Start Growing After 18 Stagnant Months

GENEVA ( TheStreet) -- The International Air Transport Association said it is seeing something unusual in the global air freight markets --- expansion, even in Europe.

Results in June for global air freight demand showed 1.2% growth from the same month last year. That represents expanding improvement over a 0.9% increase in May and over 0.1% growth in the first half of the year.

"It's too early to tell if June was a positive turning point after 18 months of stagnation," said Tony Tyler, CEO of IATA, in a prepared statement. "Air freight volumes are at their highest since mid-2011, but that good news needs to be tempered with a dose of reality. The global economic environment remains weak, and the basis for the acceleration of air cargo growth in June appears to be fragile."

Asia-Pacific volumes contracted by 1.8% from June 2012 and by 2.3% from the first six months of 2012. "This reflects the broad impact of the slowing Chinese economic expansion," IATA said. Asia-Pacific carriers are the biggest players in global air freight. Meanwhile, North America reported a 1.2% decline.

But other areas showed growth. In June, cargo volumes carried by European carriers rose 2.6% from June 2012. "Although the Eurozone remains in recession, there are some signs of stability," IATA said. "For example, manufacturing activity contracted at its slowest pace in 16 months (while) an improvement in consumer confidence is likely to support demand for the sale of light-weight high-value goods that are typically shipped by air."

Additionally, June cargo volumes grew by 12.7% in the Middle East, by 7% in Latin America and by 2.4% in Africa.

On the UPS ( UPS) second-quarter earnings call last week, executives were generally positive about Europe, noting that the company's daily export shipments increased 5%, driven by gains from Asia and Europe. At the same time, CEO Scott Davis reminded that air freight has been in decline in recent years.'

"Clearly there's less need for speed in a soft global environment," Davis said. "I think we've seen that. We've been in that environment, unfortunately, for a couple of years now. But I do think that what gets (air cargo shipping) going again is obviously innovative and high value goods," Davis said.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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