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Global demand, in cargo ton-km, grew 2.7% year on year (3.2% for international operations), lagging the 9.3% y-o-y growth in December 2021 (1% for international)
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Capacity was 11.4% above January 2021 (10.8% for international), still constrained
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Supply chain disruptions and a deterioration in economic conditions for the sector are slowing growth
Global air cargo markets grew slower in January this year as demand weakened due to supply chain disruptions and capacity constraints, as well as deteriorating economic conditions for the sector, the International Air Transport Association said on March 9.
IATA, which represents some 290 airlines that make up 83% of global air traffic, said in a press release it is returning to year-on-year traffic comparisons, instead of comparing with the 2019 period.
The group also said it has changed “freight” to “cargo” in its terminology since January 2020 to reflect a combination of mail and freight in its member-carriers’ cargo. IATA said cargo demand is tracking above pre-pandemic levels, but capacity is still constrained.
Highlights of air cargo sector’s January performance:
- Global demand, measured in cargo ton-kilometers (CTK), grew 2.7% year on year,
versus January 2021, with international operations gaining 3.2%. This was significantly lower than the 9.3% seen in December 2021 (1% for international operations). - Total cargo traffic market share by region of carriers in terms of CTK is: Asia-Pacific 32.4%, Europe 22.9%, North America 27.2%, Middle East 13.4%, Latin America 2.2%, and Africa 1.9%.
- Capacity was 11.4% above January 2021 (10.8% for international operations). This is in positive territory compared with pre-COVID-19 levels, still constrained at 8.9% growth, below January 2019 levels.
- Supply chain disruptions and deterioration in economic conditions for the sector are slowing growth. The disruptions stemmed from flight cancellations due to labor shortages, winter weather and, to a lesser extent, 5G deployment in the US, and the zero-COVID policy in mainland China and Hong Kong.
- The Purchasing Managers’ Index indicator tracking global new export orders fell below current conditions. It points to delivery times lengthening due to supply bottlenecks.
- The inventory-to-sales ratio remains low. This is positive for air cargo as it means manufacturers may turn to air cargo to meet demand rapidly.
IATA’s Director General Willie Walsh said demand growth of 2.7% in January was below expectation as the air cargo sector posted 9.3% expansion last December.
“This likely reflects a shift towards the more normal growth rate of 4.9% expected for this year,” said Walsh, who expects a slew of negative factors to impact the sector’s performance.
“Looking ahead, however, we can expect cargo markets to be impacted by the Russia-Ukraine conflict. Sanction-related shifts in manufacturing and economic activity, rising oil prices and geopolitical uncertainty are converging. Capacity is expected to come under greater pressure and rates are likely to rise. To what extent, however, it is still too early to predict,” Walsh said.
He said the airspace closures will stop direct connectivity to many markets linked to Russia. Overall, e zero-COVID policy in mainland China and Hong Kong is impacting performance.
North American carriers’ cargo volumes decreased 1.2% year on year in January, a sharp reversal from December’s 7.7% growth. Supply chain congestion due to labor shortages, severe winter and issues with 5G deployment, inflation and weaker economic conditions hit growth. Capacity grew 8.7% from January 2021 levels.
European carriers’ cargo volumes increased 7.0% y-o-y in January, slower than last December’s 10.6%, amid Europe’s robust economic activity and easing capacity that expanded 18.9% y-o-y.
Middle Eastern carriers saw a 4.6% drop in cargo volumes in January, the weakest performance among all regions, compared with last December’s 2.2%.
