Airlines forecast freight price increases

Most airline heads of cargo expect volumes to increase and pricing to remain stable or improve over the next 12 months, according to IATA’s July Business Confidence Index published today, in one of the most significant shifts in air freight pricing expectations for several years.

The quarterly survey of airline heads of cargo and CFOs found that air freight rates or “yields” were reported to have declined at a slightly slower pace in the second quarter of 2014 compared to a year ago, “consistent with recent signs of improvement in cargo demand”. Moreover, the outlook for cargo yields for the next 12 months has improved.

While a majority of respondents said they expected no change during the year ahead (57%), an increasing proportion believes there will be a rise in yields (31%). Only 11.9% of respondents predicted that average air freight prices will reduce over the next 12 months.

More than 35% reported that yields continued to decline in the previous three months, with 24% reporting price increases and 41% reporting no overall change in average rates.

The survey results for cargo volumes were positive and reflect important developments in the demand environment, IATAsaid. Respondents reported growth in air freight volumes over recent months, which is consistent with freight data and the resumption in growth in business confidence and world trade volumes.

The survey of airline heads of cargo and CFOs confirmed that the outlook for cargo volumes remained positive, with 56% of respondents expecting an increase in demand over the next 12 months.

IATA’s latest year-to-date figures show that global air freight demand, in freight tonne kilometres, grew 4.4%, year on year, in the first five months of 2014. (Source: Lloyds Loading List)