IATA: Cargo Market Analysis – Q2 2012

• Downward pressure on cargo profitability eased slightly in Q2, following an improvement in air freight demand, a small rise in yields, and a decline in oil prices; 
• Freight load factors bottomed out at the end of 2011, along with a hesitant and narrowly based upturn in demand – worldwide FTKs have expanded by 2% in April compared to the lows of Q4; 
• Improvements in business confidence and growth in world trade have supported this expansion, as has the absence of an overhang in business inventories; 
• However, the improvement in air freight markets is not widespread, with weakness in European and Chinese consumer confidence keeping demand for air-freighted commodities down in those regions; 
• Furthermore, expected increases in belly-hold capacity are likely to continue to make asset utilization a challenge; 
• Looking ahead, cargo heads surveyed in April 2012 expect downward pressure to ease on cargo yields over the next 12 months; but risks associated with the Eurozone remain a threat to this improved outlook. 

Source: IATA