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GENEVA-The international air cargo market is showing signs of improvement compared to earlier in the year, though figures remain below those of a year ago. According to the most recent molnthly report from the International Air Transport Association, while international air cargo traffic in July was down on a year-over-year basis, the discrepancy between this year’s results and last year’s is significantly smaller.

The organization says July 2009 freight traffic was only 11.3% below the ’08 level, compared to a 16.5% year-over-year decline for June and 19.3% average decline for the first seven months of the year. IATA director general and CEO Giovanni Bisignani attributes the relative improvement in performance to the restocking of inventories. “The sector is being boosted as companies restock depleted inventories,” he comments. Unfortunately, he continues, the boost may be short-lived. “Once inventories are at desired levels in relation to sales, improvements in demand will level off until business and consumer confidence returns,” he says.

According to the report, all regions except Africa saw improvement in demand compared to June. The Middle East, however, was the only region to show actual growth. Asia-Pacific, European and North American carriers recorded 9.5%, 16.2% and 14.6% year-over-year declines, respectively, but the Middle East recorded a 1% increase. Latin America also fared well, with a year-over-year decline of only 1.2%.

Bisignani says continuing downward pressure on freight rates may have helped boost freight levels, but he doubts the cheaper rates will help drive up traffic in coming months because rising fuel costs will not allow shippers to drop pricing much further. “Given the large amount of debt in all sectors of the economy, instant relief is not in the forecast,” he states.

According to IATA’s quarterly report, released at the same time as the July report, the key issue is whether de-stocking really has come to an end. It points out that a large inventory overhang remains while consumer and business spending remains low. But the report also notes that shipments of semi-conductors increased significantly in Q2 compared to Q1, which is a particularly good indicator of market shifts because computers and electronic goods represent a high proportion of air freighted goods.

At the same time, electronics shipments remain below last year’s levels. A report from Gartner Inc., a leading information technology research and advisory company based in Stamford, CT, estimates that Q2 PC shipments in Western Europe totalled 13.3 million units, 3.3% below ’08 levels. Furthermore, it says all three major markets in the region – the UK, France and Germany – saw negative growth and will likely to show further decline through the end of the year.

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