An earthquake in China and weakness in the economy of Japan led causes of a serious slowdown in international air freight growth in May, according to a report from the International Air Transport Association.

Cargo volume grew only 1.3 percent in May, at the end of five months with an average growth of 2.8 percent and following the 4.3 percent growth for the full year of 2007. The slowdown reflects a 0.5 percent contraction among Asian carriers, which were not only hurt by local troubles but by competition from U.S. carriers in the transpacific market.

"The high price of oil is re-shaping the industry. The major shifts in traffic flows experienced during May reflect this," said Giovanni Bisignani, IATA's director general and CEO.

During May jet fuel averaged $160 per barrel, which was 87 percent higher than the same time in 2007. By comparison, crude prices averaged $123 per barrel, an 81 percent increase. "Jet fuel margins are increasing the impact of skyrocketing oil prices for the aviation industry. Unit costs are up 20-30 percent and that is going to take its toll on the bottom line. Efficiency everywhere is the imperative," said Bisignani. North American cargo traffic grew 4.6 percent as U.S. carriers shifted capacity from domestic to international routes. The weak American dollar and the U.S.-EU Open Skies agreement are making U.S. airlines quite competitive, IATA said.

European cargo traffic grew only 1.4 percent as the strong Euro hurt both exports and the air cargo business for European airlines.

Contraction in Latin America and Africa was more serious but on a smaller scale than in Asia. Latin America freight volumes contracted 13.2 percent as airlines retired their wide-body aircraft in favor of narrow-bodies with limited cargo capacity. Freight traffic fell 6.5 percent in Africa.

The trend in the Middle East was unique with a 10.7 percent growth rate propelled by oil-based economic growth, said IATA.