FAA predicts 3.1 percent growth in air cargo, driven by international trade
The FAA predicts brisk cargo growth for U.S. carriers, to the tune of 3.1 percent annually for the next two decades, as well as a shift towards maindeck cargo, according to the agency’s just releases 2017-2037 Aerospace Forecast. These cheerful numbers are predicated on booming international trade, an interesting takeaway considering the current political climate.
Following a reported 0.9 percent decline in 2016, total (both domestic and international) revenue ton miles (RTM) flown by U.S. carriers are forecast to grow 1.4 percent in 2017. Assuming a continued global economic recovery, the FAA predicts an average annual growth in total RTMs of 3.1 percent through 2037.
Domestic cargo RTMs are forecast to grow 1.7 percent in 2017. Over the subsequent two decades, domestic cargo RTM growth is expected to slow to an average annual rate of 1.3 percent.
The agency also expects U.S. all-cargo carriers to increase their share of the domestic cargo market from 89.0 percent of RTMs to 90.5 percent by 2037, based on “increases in capacity for all-cargo carriers and ongoing security considerations.” On the international level, the all-cargo share of international RTMs flown is forecast to “increase modestly” to 77.1 percent by 2037.
Here’s where it gets interesting.
The Congressional Budget Office projects an approximate 1.8 percent GDP growth over the next decade. President Trump promised 4 percent growth – an ambitious goal to say the least. In this context, the FAA’s projections for domestic cargo growth, at 1.3 percent, are well below both figures. However, at 3.8 percent, the FAA’s projections for international RTM growth could only be met on the condition of continued growth international trade. At the same time, the two-decade total annual overall growth figure of 3.1 percent (well above the domestic 1.3 percent) is reliant upon continued international trade. These numbers only add up if the U.S. continues to improve its trade relations with international partners.
International cargo RTM growth is expected to turn positive in 2017 to 1.3 percent as global trade growth “picks up pace.” Over the next two decades, international cargo RTMs are forecast to increase an average of 3.8 percent a year “based on projected growth in world GDP with the Pacific region having the fastest growth, followed by the Other International, Atlantic, and Latin regions, respectively.” That means more trade with the likes of China, as well as the countries that signed up for the scuttled TPP trade treaty.