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RIYADH: Airlines in the Middle East saw a 15.3 percent year-on-year increase in cargo demand in May, driven by growing e-commerce and maritime concerns, an analysis showed.

The International Air Transport Association said in its latest report that airlines in the Middle East region handled 13.5 percent of total cargo worldwide, a figure unchanged from the previous month.

IATA also highlighted that the total cargo capacity of carriers in the region increased by 2.7 percent in May compared to the same month of the previous year.

Countries in the Middle East region, including Saudi Arabia, have strengthened their aviation sector in recent years as they continue to reduce their dependence on oil and continue their path of economic diversification.

Saudi Arabia’s National Aviation Strategy outlines an ambitious plan aimed at handling 4.5 tonnes of cargo by the end of this decade, along with creating more than 250 direct destinations from the kingdom’s airports to global destinations.

“Demand for air freight transport increased sharply in May in all regions. The sector has benefited from trade growth, the boom in e-commerce and maritime capacity constraints,” said Willie Walsh, IATA Director General.

The report revealed that demand for air cargo routes between the Middle East and Europe grew by 33.8 percent year-on-year in May.

Demand for freight transport between the region and Asia increased by 18.6 percent year-on-year in May.

Global outlook

Total demand for air freight, measured in tonne-kilometres, rose 14.7 percent in May compared to the same month a year earlier, marking the sixth consecutive month of double-digit year-on-year growth. annual growth.

IATA revealed that African airlines saw an 18.4 percent year-on-year increase in air cargo demand over the period – the strongest of any region.

In addition, demand for air cargo routes between African and Asian markets increased by 40.6 percent in May compared to the same month a year earlier, the most robust performance among all trade routes.

The report further states that African airlines’ air cargo capacity increased by 21.4 percent year-on-year in the fifth month of the year.

Similarly, the Asia-Pacific region saw a year-on-year increase in air cargo handling by 17.8 percent in May.

Capacity of Asia-Pacific carriers increased by 8.4 percent in May compared to the same month of the previous year.

On the other hand, European carriers recorded a year-on-year increase in demand for air freight transport by 17.2%.

The report revealed that intra-European air cargo grew by 25.6 percent compared to May 2023, the fifth consecutive month of double-digit annual growth, while demand increased by 33.8 percent on Europe-Middle East routes.

Similarly, the air cargo capacity of European airlines increased by 11.9 percent in May compared to the same month of the previous year.

Latin American carriers recorded year-on-year growth of 12.7 percent in May, while capacity for these carriers increased by 8 percent over the same period.

On the other hand, North American carriers saw 8.7 percent growth in air cargo handling, the weakest of all regions. Airline capacity in the region also rose slightly in May by 2.5 percent compared to the same month a year earlier.

“For Asia and North America, the largest trade route by volume, the question remains what will happen after the US crackdown on e-commerce shipments from China. Rising costs and increasing transit times for shipments under $800 could dampen U.S. consumers’ appetite for e-commerce, which could impact the entire air cargo sector,” the report warned.

IATA is optimistic about future growth

In an analysis, the airline trade association noted that it is optimistic about future growth in air cargo, as most countries have seen positive PMI readings in recent months.

According to Investopedia, the PMI measures the prevailing direction of economic trends in manufacturing. It is calculated based on a monthly survey of supply chain managers in 19 industries, covering both upstream and downstream activities.

IATA revealed that PMIs for global manufacturing output and new export orders indicated expansion at 52.6 and 50.04 respectively.

“May saw small improvements in global production and trade data, continuing optimism for new export orders and manufacturing output among purchasing managers,” IATA said in a report.

Similarly, industrial production increased by 0.5 percent and global cross-border trade by 1.5 percent month-on-month in April.

“The outlook remains largely positive, purchasing managers show expectations for future growth. However, some dampening could come as the US imposes stricter conditions on e-commerce supplies from China,” Walsh said.

He added: “Increased costs and transit times for shipments under $800 could turn off US consumers and pose significant challenges to growth in the Asia-North America trade route – the largest in the world.”

The report further said that April inflation data showed a mixed picture.

In April, the inflation rate in Japan and the EU fell to 2.8 percent and 2.7 percent, respectively, while it rose to 3.3 percent in the US.

In contrast, China’s inflation rate remained at 0.3 percent, reflecting weak domestic demand due to high unemployment, slow income growth and a crisis in the real estate sector, a trend that has continued since 2023.

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