A global economic slowdown and stagnating trade are becoming more evident, with global air freight volume dropping in March.

Fresh data provided by the International Air Transport Association (Iata) yesterday showed a 2 per cent year-on-year drop in March air freight volume measured in freight tonne km.

While demand weakened, freight capacity still increased by 6.9 per cent due to rising competition among airlines.

The most significant fall in air freight demand was reported by carriers in the Asia-Pacific and North America, Iata added.

Asia-Pacific carriers reported a 5.2 per cent year-on-year drop in volume for March, while North America's volume slid 1.8 per cent. In Europe, demand for air cargo grew a modest 1.3 per cent, but the volume stayed at just around 1 per cent above the early 2008 level.

The weak figures in March were due partly to a higher base early last year when air freight volumes were boosted by the impact of the United States West Coast seaport strikes.

But a string of disappointing purchasing managers' index (PMI) numbers in recent days in key markets suggested a global slowdown in manufacturing and trade.

Markit US manufacturing PMI came in at 50.8 in April, down from 51.5 in March.

In China, the Caixin PMI slid to 49.4 last month, down further from March's 49.7.

PMI readings that are below 50 indicate a contraction in manufacturing activities.

The Nikkei whole economy PMI for export-reliant Singapore also came out yesterday, with a reading of 49.4 in April - the first contraction since May last year and the lowest reading since November 2012.

Iata chief executive Tony Tyler said: "It's shaping up to be another tough year for air cargo. February 2016 world trade volumes were only 0.4 per cent higher than at the end of 2014. And the expectations of purchasing managers give little optimism for an early uptick.

"The combination of fierce competition, capacity increases and stagnant demand makes this a very difficult environment in which to generate profits."

Wong Wei Han