Slowing world trade clouding air cargo prospects

World economy is having a tough time with sharpest contraction in world trade since 2008 crisis. US, Europe and China, the three major trade blocs, have awed the world economy with their exports continuing their south dive for sometime now. Asian trade is highlighted by a stark deceleration in Chinas trade, and exports of Taiwan, Japan and Korea have tapered as well. Global air cargo has followed the suit as global air freight continues to slowdown due to weakness in the key exports markets. The latest air traffic results by International Air Transport Association (IATA) show no positive movement or development with minimal chances of improvement come 2013. The slight recovery which emerged towards the end of 2011 has been marred by lower business confidence around the globe and cowed world trade growth. The latest figures showcase that the total world air freight volumes weakened further in July 2012 with the demand shrinking by 3.2 percent YoY; whereas the QoQ performance has been flat. The total freight load factor for the seven months of 2012 so far, has slid to 44.6 percent versus 46.2 percent during similar period last year. One of the weakest regions in terms of air freight, according to the latest numbers, has been Asia Pacific, which also has the largest share of the air freight market. Carriers in Asia Pacific witnessed a decline of over seven percent YoY during July 2012, and the trend of stagnation had become the fate of the biggest market since the close of 2011. In order to bolster razor thin profits and improve freight load factors, the airlines have responded to the retard air cargo by cutting and halting capacities. With the exception of Middle Eastern and Latin American carriers, capacity in Asia Pacific plunged by more than four percent YoY, while it remained stagnant for Europe. Global passenger market has also been hammered indirectly by a slump in the world trade. With low business confidence overshadowing global economy in the coming months, air travel and air freight remain highly vulnerable to Lamys opinion regarding 2012 slowdown in world trade.