Cargo traffic jumped 12.1 percent in August, continuing double-digit run

World air cargo traffic rose by 12.1 percent in August over the year-earlier period, the fifth month out of the last six that demand has grown at double-digit levels, the International Air Transport Association (IATA), the leading world airline group, said today.

The August data is a further sign that world cargo activity is on pace to rise by double-digit levels in 2017, above the 7.5-percent increase that IATA forecast at the start of the year, and well above the 4.4-percent average growth rate for the past five years. Traffic growth in the first half of 2017 was up 10.7 percent, and the market has recorded year-on-year gains above those levels in the two months since then.

IATA said in a statement that its original 2017 forecast holds "significant upside potential" even if cyclical factors that have been driving growth this year, such as an uptick in inventory restocking in the U.S., have peaked.

Cargo capacity, meanwhile, grew in August by just 4.7 percent year over year, continuing the trend in 2017 of demand easily exceeding capacity. For most of the past seven years, the opposite has been the case.

The current trend helps airlines by allowing them to charge more for their services, thus strengthening their yields. However, it pressures air freight forwarders, typically the largest users of air cargo services, because it compresses their margins at a faster rate than they can compensate for by passing on rate increases to their customers.

The combination of strong demand and tighter capacity means that cargo space is now "growing in response to real cargo demand, rather than automatically as carriers responded to passenger demand," Alexandre de Juniac, IATA's director general and CEO said in the statement. About 40 to 45 percent of global air trade moves in the lower-hold compartments, or "bellies," of passenger aircraft. Bookings for belly cargo are dictated by schedules for passenger flights, because passenger tickets account for the bulk of the revenue generation.

All markets except for Latin America reported double-digit cargo increases in August, IATA said. The Asia-Pacific region, which has the largest market share, gained 11.3 percent. North American airline volumes rose 11.7 percent year over year, IATA said.