The first signs of the impact of the global financial crisis on logistics markets are starting to appear, with the International Air Transport Association (IATA) issuing a revised set of forecasts predicting lower growth for the aviation sector over the next twelve months.
The organisation has scaled back its estimates for the combined profits of its airline members from $7.8billion to $5billion. The reason for this is twofold. Firstly, it expects the price of oil to remain high but more pertinently it believes the 'credit crunch' will hit demand. Growth for cargo is predicted by IATA to be 4.3% in terms of tonnes per kilometre over next year, down from a 4.8% prediction made by the organisation in October of this year.
IATA admits that moderating demand will lead to falls in fuel prices, but it believes these will be limited with prices remaining at around $78 per barrel, resulting in fuel costs rising to 30% of operating costs.
The main problem will be falling demand. One of the foundations of the airlines' recent profitability has been the strength of demand across all major markets, increasing annually by between 5 to 15%. But dramatically falling consumer confidence in the US, IATA believes, will presage falls in demand and this will hit load factors.
The airline sector is faced with continuing issues of productivity, compounded by the familiar issue of a surge of new capacity hitting the markets as airlines take delivery of new aircraft. One compensation from this, however, will be that these new aircraft are much more fuel efficient, with the sector delivering increased growth of fuel consumption per tonne kilometre.
With the consequences of the 'credit crunch' for the non-finance economy still so unclear it is difficult to make predictions. For air cargo in particular, what appears to be a fundamental re-alignment of world trade flows raises difficult questions about traffic patterns above and beyond the issue of overall volumes. IATA's figures however, are an early sign that the prospects for the logistics sector are being re-examined.
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