Will Trump kill air freight?

The International Air Transport Association (IATA) has released demand growth results for global air freight markets for February 2018, showing a 6.8% increase in demand measured in freight tonne kilometres (FTK) compared to the same period last year. Adjusting for the potential Lunar New Year distortions by combining growth in January 2018 and February 2018, demand increased by 7.7%. This was the strongest start to a year since 2015.
Freight capacity, measured in available freight tonne kilometres (AFTK), grew by 5.6% year-on-year in February 2018. Demand growth outstripped capacity growth for the 19th month in a row, which is positive for airline yields and the industry’s financial performance.
The continued growth in air cargo demand is consistent with ongoing robust global trade flows. There are, however, signs that the best of the upturn for air freight has passed. Demand drivers for air cargo are moving away from the highly supportive levels seen last year. In recent months, the Purchasing Managers’ Index (PMI) for manufacturing and export orders has softened in a number of key exporting nations including Germany, China and the US. And the seasonally-adjusted demand for air cargo, which rose at a double-digit annualised rate for much of 2017, is now trending at 3%.
“Demand for air cargo continues to be strong, with 6.8% growth in February. The positive outlook for the rest of 2018, however, faces some potentially strong headwinds, including escalation of protectionist measures into a full-blown trade war. Prosperity grows when borders are open to people and to trade, and we are all held back when they are not,” said Alexandre de Juniac, IATA’s director general and CEO. Regional performance 
All regions reported an increase in demand in February 2018.
Asia-Pacific airlines saw demand in freight volumes grow 6.5% in February 2018 and capacity increase by 7.2%, compared to the same period in 2017. The upward-trend in seasonally-adjusted volumes has returned, with volumes currently trending upwards at an annualised pace of between 6.0% and 7.0%. As the largest freight-flying region, carrying close to 37% of global air freight, the risks from protectionist measures impacting the region are disproportionately high.
North American airlines’ freight volumes expanded 7.3% in February 2018 compared to the same period a year earlier, and capacity increased by 4.1%. Seasonally-adjusted volumes are broadly trending sideways. The weakening of the US dollar over the past year has helped boost demand for air exports. Data from the US Census Bureau shows a 10.2% year-on-year increase in air export volumes from the US in January 2018, compared to a slower rise in imports of 6.7%.
European airlines posted a 5.7% increase in freight volumes in February 2018. This was almost half the rate of the previous month and the slowest of all regions. Capacity increased 3.8%. Seasonally-adjusted volumes have been volatile in 2018 with the jump in demand in January largely reversed in month-on-month terms in February. The strength of the Euro and the risks from protectionist measures may impact the European freight market which has benefitted from strong export orders, particularly in Germany, in recent years.
Middle Eastern carriers’ year-on-year freight volumes increased 7.4% in February 2018 and capacity increased 7.6%. Seasonally adjusted freight volumes continue to trend upwards, however, they have slowed to an annualised rate of 4% since late 2017. This largely reflects the weak conditions on the routes to and from Europe which have seen demand trend downwards at a double-digit rate over the past five months.
Latin American airlines experienced growth in demand of 8.7% in February 2018 and a capacity increase of 6.9%. The pick-up in demand over the last 18 months comes alongside signs of economic recovery in the region’s largest economy, Brazil. Seasonally-adjusted international freight volumes are now back to the levels seen at the end of 2014.
African carriers’ saw freight demand increase by 15.9% in February 2018 compared to the same month last year – the largest increase of any region. Capacity increased by 3.9%. The increase was helped by very strong growth on the trade lanes to and from Asia driven by ongoing foreign investment flows into Africa. While the surge in demand on the route looks to have stabilised, volumes still increased by nearly 24% in year-on-year terms in January.
 
 

Trump calls for Amazon to raise delivery fees

US President Donald Trump took to Twitter over the Christmas break to call for e-commerce companies such as Amazon to raise delivery prices and pay more to the United States Post Service (USPS).
“Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!” Trump wrote in late December.
The US leader has previously used Twitter to slight Amazon, though according to news portal CNN, his latest assertion may be true. Unfortunately, CNN’s Lydia DePillas noted, while the USPS may not be being fully compensated for services rendered at present, this is a result of its own inner workings rather than unfair treatment by its major customer Amazon and others.

Australia remains unconvinced on TPP’s imminent demise

The Australian government is not backing away from the Trans-Pacific Partnership (TPP) trade agreement despite US president Donald Trump making killing the agreement a first priority, according to 9News.
This statement follows a report stating that President Trump’s press secretary, Sean Spicer, said that President Trump would stick to his planned list of executive orders and that ditching the TPP is part of that list.
“He is going to make sure every deal he cuts, just like he did in business, puts American workers and American manufacturing, American services first,” Spicer added.
Australian trade minister Steve Ciobo told America’s CNN that the TPP was not ‘dead’.
“What I would encourage President-elect Trump to do, what we’d really encourage the Americans to do, is to consider that there may be aspects of the TPP that they don’t like, but this is not a deal to be junked,” Ciobo said.
President Trump has previously said that he is only interested in doing bilateral deals with other countries.
However, according to Dr Giovanni Di Lieto, lecturer at Monash Business School, Australia all is not lost, even with the TPP potentially never seeing the light of day. Australia has a number of other trans-pacific trade options which its industry, including manufacturers can exploit.
“Running alongside the crippled TPP, and potentially of more importance to Australian trade, has been the Regional Comprehensive Economic Partnership,” Dr Leto said.
“If, as seems likely, the RCEP is accomplished in the near future, it will be the world’s largest free-trade agreement, covering a population of 3.5 billion, or more than 50 per cent of the world total, and about 40 per cent of the world trade volumes.”

US truck, rail industries rally to lobby congress

The US’ trucking and rail industries are reportedly putting aside their differences to present a united front as they push Donald Trump’s incoming administration for limits on transportation regulators’ ability to set new rules.
“Leaders of the industry trade groups say they are trying to unite transport representatives in Washington, including airline, automobile and shipping groups, in the effort to reverse Obama administration–era safety initiatives and slow the process for enacting new regulations,” stated the Wall Street Journal’s Paul Page.
Lobby groups are reportedly anticipating business-friendly policy changes with Donald Trump on the Oval Office and the Republican Party controlling both chambers of Congress.
Over the past eight years of Barack Obama’s presidency, Page said, a series of freight and passenger transport rules intended to reduce traffic and rail accidents have been introduced. Opponents of the regulations claim that such safety benefits remain unproven and the new rules have added costs at a time when corporate profits are already suffering from poor freight volumes.
Changes requested by the industry groups include rule changes of truck driver work limits and safety-equipment requirements for trains. They also want the process for rule introduction to be modified, with an added requirement for more consultation with industry, something which is a standard component of the process to develop new rules but which the groups claim was avoided by Obama through executive orders and safety advisories.
Chris Spear, CEO of the American Trucking Industry told Page in an interview, “Industry needs to be involved in developing the process that makes the rules. There should be a clear return in exchange for compliance.”

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