According to AAPA director general, the current trade war going on between China and US is severely affecting the Asian airline’s demand for air cargo. At annual meeting of IATA organized in Seoul, Andrew Herdman said that in the cargo industry, the major players are Asian airlines as they carry around 40% of the global volume.
Herdman said that they are certainly observing the effects and they are more than spectators. He said that every year they are seeing a decrement in growth of cargo. Last year, they had seen growth slowing down in cargo but now it is getting negative after year which has been a weak start for the year.
Herdman added that the trade war between China and US is spreading out beyond these two countries and disrupting the world’s supply chain in other countries of Asia. Last week, the data for global air cargo market was released by IATA which showed a decrease in demand of 4.7% in April which was the continuation of the decrement in demand which had started in the month of January. In the same time period, the demand for APA also decreased by 7.4%.
IATA said that trade unpredictability triggered by tariffs tensions and Brexit between China and US has resulted in declining of fresh export orders. This weakness is expected to remain in upcoming months. The general director and CEO of IATA said that Asia is vulnerable to the trade war consequences or protectionism as the main goods and cargo traffic is flowing either within Asia or outside Asia to rest of the world.
IATA also cut its profit outlook of year 2019 for airlines. It is expecting to have profit of $28 billion this year which is a decline from previous year by $2 billion. In Herdman’s view, outcome for second half of the year remains doubtful. He said that this unpredictability means APA has to think regarding their source related decisions.