The International Air Transport Association (IATA) has reported a noticeable rebound in the air cargo sector for 2023. The industry has demonstrated resilience despite economic uncertainties, particularly during the fourth quarter.
Here’s a snapshot of the 2023 air freight market trends:
- Slight Decline in Demand: While there was a dip in demand for air cargo, with full-year cargo tonne-kilometers (CTKs) decreasing by 1.9% from 2022, the numbers held close to pre-pandemic levels, only 3.6% below 2019 figures.
- Capacity Increases: The available cargo tonne-kilometers (ACTKs) rose significantly in 2023, registering an 11.3% increase over 2022 and a 2.5% increase compared to 2019 figures.
- Exceptional December Performance: December 2023 showcased a remarkable surge, with global demand jumping 10.8% higher than the previous year, recording the strongest growth in two years.
- Positive Signs Amidst Concerns:
- There was an uptick in global cross-border trade growth for the third month in a row in October, suggesting a reversal from the previous declining trend.
- Inflation rates in the United States and the European Union were maintainable, with the Consumer Price Indices (CPI) remaining below 3.5% year-on-year.
- China’s inflation rates raised red flags due to a continuing deflation trend for three months, hinting at a potential economic slowdown.
- Indicators like the manufacturing output and new export order Purchasing Managers Indexes (PMIs), typically associated with air cargo demand, were below 50 in December, indicating economic contraction.
These trends underline the dynamic nature of the global air freight market as it adapts to a post-pandemic world and navigates through economic complexities.
Air Cargo Markets Regain Lost Ground
“Despite political and economic challenges, 2023 saw air cargo markets regain ground lost in 2022 after the extraordinary COVID peak in 2021. Although full-year demand was shy of pre-COVID levels by 3.6%, the significant strengthening in the last quarter is a sign that markets are stabilizing towards more normal demand patterns. That puts the industry on very solid ground for success in 2024. But with continued, and in some cases intensifying, instability in geopolitics and economic forces, little should be taken for granted in the months ahead,” said Willie Walsh, IATA’s Director General.
2023 Regional Air Cargo Performance
Aviation Demand Trends in the Asia-Pacific Region
The Asia-Pacific airlines witnessed a slight 0.9% uptick in demand overall in 2023, with their international sectors experiencing a dip of -1.4%. However, airlines’ capacity surged by 28.5% overall, with international capacity jumping by 16.6%. December 2023 stood out, with Asia-Pacific carriers leading the global market, as demand soared by 18.5%, with international operations closely following at a 15.4% increase. Airlines recorded 31.1% capacity growth in December, alongside 22.9% for international routes.
North American Airlines’ Performance Assessment
Contrastingly, North American carriers faced a challenging year with a 5.7% decline in demand and only a slight capacity increase of 0.3%, hinting at an overestimated growth forecast. In particular, international demand fell by 4.3%, yet capacity in these operations rose by 2.7%. In December 2023, demand in this region continued its downward trend, contrasting with a 5.9% increase in international operations. Capacity adjustments were modest, with a 2.4% raise.
Analyzing European Airline Activities
European carriers reported a 3.9% decrease in demand throughout 2023, with international demand shrinking slightly more at -4.1%. Simultaneously, capacity escalated by 4.5% for both domestic and international flights. December brought some respite as demand escalations of 8.6% were seen, a figure that climbs a notch higher at 8.7% for international routes. Capacity also experienced an increase of 7.4%. These trend changes can be largely attributed to the ongoing conflict in Ukraine.
Middle Eastern Carriers Grow in 2023
Middle Eastern carriers demonstrated resilience with a 1.6% demand growth for domestic and international flights. The region’s capacity also rose by 13.5%, slightly edging out the international capacity increase at 13.6%. The end of the year witnessed robust growth, as December displayed a stunning 18.3% demand increase and a solid capacity increase of 17.7% for domestic and international flights.
Latin American Airlines: A Surge in Demand
The Latin American carriers shone brightly with the best year-on-year performance, marking a 2.0% rise in demand and a 1.9% increase for international flights. Capacity expansion was notable, with 13.2% overall and 16.9% for international routes. December 2023 also observed a strong demand growth of 6.4%, supplemented by a capacity increase of 3.5% on international flights.
African Airlines Demand Analysis
Conversely, African airlines faced a demand contraction of 1.8% and a more pronounced reduction of 2.0% in international demand. Similarly, capacity expanded by 5.6% domestically and 5.0% internationally. December 2023 yielded weakened performance for African carriers, with demand tapering by 1.2% (international operations were down by -1.4%). Yet, capacity grew by 7.4%, a trend that may require future strategic adjustments.
Red Sea Disruption
The air cargo sector saw a small upward trend in demand and profit margins towards the end of the year, influenced by disturbances in the Red Sea region*. An analysis between the week starting on November 4, 2023, and the week ending December 9, 2023, revealed:
- There was a global increase in air cargo demand by 1% and a significant 5% increase in yields;
- In the Asia-Pacific area, there was notable growth, with demand up by 2% and yields by 6%;
- Trade between China and the world went up slightly in demand by 1%, but yields saw a substantial 11% jump;
- Europe maintained a stable demand while seeing a 3% increase in yields;
- The Middle East also kept a steady demand, with a 4% yield increase.
Data from the latter half of December indicated a return to typical levels for both demand and yields.
“The recent disruption to maritime routes in the Red Sea has seen some shippers pivot to air cargo. The increased demand saw a spike in air cargo yields on related trade lanes. A similar spike is expected in January as disruptions intensified. While not all cargo is suitable for air transport, it is a vital option for some of the most urgent shipments in extraordinary circumstances. And that is critical to the continuity of the global economy, said Walsh.
* indicated by © IATA CargoIS data
Additional IATA Notes
- The International Air Transport Association (IATA) is an organization that represents around 320 airlines, which amounts to 83% of the total worldwide air traffic.
- Key terms used in air cargo measurements include:
- CTK: This stands for cargo tonne-kilometers and measures the actual cargo moved.
- ACTK: Refers to available cargo tonne-kilometers, indicating the total available cargo capacity.
- CLF: The cargo load factor is the percentage of the available cargo capacity that is actually used.
- The statistics provided by IATA encompass international and domestic scheduled air cargo for airlines that are members of IATA and non-member airlines.
- When looking at the total cargo traffic market share by region, in terms of CTK, the breakdown is as follows:
- Asia-Pacific leads with 32.4%
- North America follows with 28.1%
- Europe holds 21.8%
- The Middle East contributes 13.0%
- Latin America comes in at 2.7%
- Africa has the smallest share with 2.0%
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