The latest equity findings have been released by Cowen on April's International Air Transport Association (IATA) data research.
Trade uncertainty continues to limit business spending as companies delay investments until there is improved clarity on US - China trade relations.
In the report, analyst Helane Becker said: "This dynamic produced soft air freight demand in April which declined by 4.7% on 2.6% capacity growth. American imports continue to shift away from China and to countries such as Vietnam, which saw a 40% y/y increase in exports to the US in the first quarter of 2019.
"The April IATA data saw demand decline for three of the first four months this year, and in four of the past five months, with March rising just 0.1%.
"We note that IATA does not capture e-commerce growth or express services. Global e-commerce sales grew 20% in 2018 and express services are also increasing at a faster pace than the overall air freight market."
Volumes for the initial five-year period grew 260bps quicker than the most recent 16-months, while capacity growth of 4% is largely unchanged. The slowdown in air freight volumes is correlated with the beginning of the trade war, which commenced March 8, 2018 (the date president Trump announced tariffs on steel and aluminium imports).
In the report, it's said: "As mentioned previously, we believe businesses are looking to invest in CAPEX, however, the trade war is wreaking havoc across supply chains which is probably delaying investment spending. Separately, there has been a shift in production away from China and into other regions such as Vietnam and South Korea.
"This is evident by the reported 40% and 18% increases in American imports from Vietnam and South Korea, respectively in 1Q19. China exports to the US fell 14% in the March quarter. Companies could be willing to increase investment spending again now that the manufacturing factories are out of the US - China cross hairs, although it is too soon to tell if the shift will have a positive effect on global trade growth."