© Reuters. Labourers work inside and around a passenger plane as they convert it into a cargo plane at Israel Aerospace Industries site in Ben Gurion International Airport, Lod, Israel December 10, 2020. Picture taken December 10, 2020 REUTERS/ Ronen Zvulun
DUBAI (Reuters) – The strong air cargo demand that has helped passenger-deprived airlines stay afloat over the past two years is showing signs of softening amid decades-high inflation that is pushing up costs.
The Baltic Air Freight Index, which shows weekly transactional rates for general cargo, fell 8.7% last week, while the airlines group IATA predicted on Monday that freight revenue generated by carriers this year would fall by 6.4%.
“There will be a downturn in business, and when there is a downturn in business, people don’t buy stuff that we normally carry as cargo,” Qatar Airways Chief Executive Akbar Al Baker told reporters on Monday at an airline industry meet in Doha.
With capacity able to meet current demand, a drop in bookings will create downward pressure on yields when the recession starts, he said.
The freight market – both air and ocean – has recorded sky-rocketing rates since the pandemic, in part due to deep capacity cuts that have left limited space for shippers.
But with Russia’s invasion of Ukraine compounding the economic damage from the pandemic, a vaulting U.S. dollar and decades-high inflation tightening financial conditions, the global economy is now heading towards slowdown.
The World Bank this month slashed its global growth forecast by 1.2 percentage points to 2.9% for 2022 and warned many countries were likely to face recessions.
Credit Agricole (OTC:CRARY) CIB’s Global Head of Asset Finance Group Jose Abramovici told Reuters that air freight rates were nonetheless so high today that the sector would remain profitable for several more years.
Emirates cargo boss Nabil Sultan said in an interview that rates would stay high for at least another six to eight months in part due to surging fuel prices, but also because demand would still continue to outmatch air freight capacity.
However, he warned that margins were tightening because of fuel and other rising costs, which were almost making certain routes unviable to operate.
Italy says can exceed 3.1% growth target for 2022 despite energy prices
© Reuters. FILE PHOTO: People walk along the Galleria Vittorio Emanuele II shopping mall in Milan, August 25, 2015. REUTERS/Flavio Lo Scalzo
ROME (Reuters) – Italy’s Treasury said the country’s economy could grow this year by at least as much as Rome’s official target of 3.1% set in April, despite the negative impact of surging energy prices.
Italy grew 0.1% in the first quarter from the previous three months, national statistics bureau ISTAT said last month, revising up a preliminary estimate of a 0.2% contraction.
This left Italy with so-called “carryover” growth of 2.6% this year, assuming gross domestic product was flat in the remaining three quarters, ISTAT said.
Announcing on Monday the bond issuance programme for the third quarter, the Treasury said it expected growth to accelerate in the second quarter, compared with the first three months.
This still makes it plausible to reach or exceed the 2022 growth target of 3.1%, it said in its debt issuance report.
Prime Minister Mario Draghi’s government in April revised down its 2022 economic growth forecast to 3.1% from a 4.7% projection made last September.
The government has budgeted since January more than 33 billion euros ($34.90 billion) to soften the impact of sky-high electricity, gas and petrol costs.
($1 = 0.9456 euros)
French consumer confidence falls more than expected in June
© Reuters. A woman shops at a fruit and vegetables shop in Paris, France, June 10, 2022. REUTERS/Sarah Meyssonnier
PARIS (Reuters) – French consumer confidence fell more than expected in June, hitting a near nine-year low as concerns about the economic outlook surged in the face of high inflation and political uncertainty, a survey showed on Tuesday.
The INSEE official statistics agency said its consumer confidence index fell to 82 in June from 85 in May and the lowest level since July 2013.
A Reuters poll of 14 economists had an average forecast of 84 with the lowest estimate for 83.
Although households’ concerns about future inflation remained well above the long-term average, they eased in June for the third month in a row.
However, household sentiment about the general economic outlook continued to worsen, falling to the lowest level since May 2020 when France was in the second month of its first and most strict COVID-19 lockdown.
While surging inflation has stressed households in recent months, France’s political situation has added to uncertainty about the economic outlook since President Emmanuel Macron’s party lost its ruling majority in legislative elections this month.
Peru truckers, farmers to strike over fuel and fertilizer costs
© Reuters. FILE PHOTO: People walk next to parked trucks during a national transportation strike against fuel prices, in Lima, Peru March 18, 2021. REUTERS/Angela Ponce/File Photo
By Marco Aquino
LIMA (Reuters) – Peru’s truckers and some farm groups will go on strike on Monday after failing to reach agreements with the government seeking measures to reduce the impact of steep global price rises of fuel and fertilizer, sector leaders said on Sunday.
Union leaders met on Friday and Saturday with government representatives, with demands including considering freight transport a “public service” that would reduce costs and curb competition from truckers from neighbor countries.
“We are firm in plans to strike with all our bases nationwide,” the leader of the heavy load haulage and drivers union Marlon Milla told radio station RPP. The union has 400,000 cargo transport units in 14 of the 25 regions of the country.
High global fuel prices linked to Russia’s invasion of Ukraine have stoked unrest in Peru, the world’s No. 2 copper producer, while shortages of fertilizer have raised fears over food supply with the government struggling to secure shipments.
The government of leftist President Pedro Castillo, who has seen his popularity tumble since taking office last year, has taken measures to curb the rising cost of living, but the annual inflation rate remains at around 8%, its highest level in 24 years.
Some farming unions also announced strikes on Monday, in protest at the rise in fertilizer prices and shortages.
Latin American leaders are grappling to bring down spiraling prices despite major interest rate hikes. Trucking protests over fuel costs have hit Argentina while Ecuador is being roiled by protests in part linked to gas prices. [L4N2YB27W]
“The dialogue has not been exhausted, we are in a permanent session of ministers to avoid protest,” Justice Minister Félix Chero told reporters on Sunday. The government is offering subsidies for road tolls and fertilizer costs.
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