The International Air Transport Association (IATA), a global aviation body, recently released important new data. It found that the international air cargo market registered significant expansion in Q4 2016, reflecting the growth seen in the global manufacturing Purchasing Manager’s Index (PMI).
According to Freight Week, IATA figures indicate that the volume of global air cargo rose by 6.8% in the year to November 2016. The organisation attributed this growth to a turnaround in new export orders, a rise in silicon material shipments and a theoretical shift to air cargo, in the wake of the recent collapse of the Hanjin Shipping Company. Commenting, IATA’s CEO, Alexandre de Juniac, said:
“Air cargo enjoyed a strong peak season in November. And there are encouraging signs that this growth will to continue into 2017, particularly with the shipment of high-value consumer electronics and their component parts… But, the trend in world trade is still stagnant.” IATA raised the broader weakness in world trade conditions as a key concern for the sector. For the past two years, trade volumes have trended sideways, before dropping for only the third month in seven years last October.
This data’s release coincided with the unveiling of J.P. Morgan/IHS Markit Global’s manufacturing and services PMI survey for December 2016. This Index tracks the health of the international manufacturing industry, with readings of 50 out of 100 or higher indicating growth. Bolstered by increasing employment and new business levels, the PMI climbed to a 13 month high, from 53.4 to 53.4 points, during the November to December period, according to JP Morgan and HIS Markit Global.
The PMI’s expansion across Q4 2016, came in at the fastest pace registered since Q3 the year before. However the rate of growth for the past year was the slowest since 2012, due to lacklustre progress in the beginning of 2016. December’s PMI figures mirrored increasing industrial output in key nations such as China, the US the UK, Japan, Russia and the Eurozone. In nearly all these nations growth accelerated between Q3 and Q4, except in the US, which experienced a “mild” slowdown of expansion.
Speaking out on these results David Hensley, J.P. Morgan’s Director of Global Economic Coordination, was quoted by Freight Week saying: “PMI data signal a positive end to the year for the global economy. Output growth accelerated to a 13-month high, with solid trends seen at both manufacturers and service providers… Improving rates of expansion in new business and employment suggest that the [global] economy is taking positive momentum into the new year, which should ensure the growth recovery continues to take hold at the start of 2017.”
The point that Hensley made, concerning the global economy’s positive outlook heading into 2017, is crucial. It suggests that manufacturing companies will continue increasing output throughout the coming year, across the world’s strongest economies. This could open up new business opportunities for air cargo firms like SW Italia, a company headed by Ignazio Coraci which serves the Italian market, to fly more products to consumers worldwide. In this context, the growth of the global air cargo market in November 2016 was not a unique occurrence, as it could continue across the coming year.