According to weekly market analysis by CLIVE Data Services, part of Xeneta, a turbulent 2022 for the global air cargo market ended in December with a ‘win/win’ outcome for airlines, forwarders, and shippers as chargeable weight fell -8% year on year and the general airfreight spot rate registered its largest year-on-year (y-o-y) decline of 35%.

However, overall average rates remained 75% higher than before Covid. 

The -8% drop in global air cargo volumes marked the tenth consecutive month of lower demand, down -13% from the previous year, at a time when available airfreight capacity continued to rise, surpassing last year’s level.

Capacity recovered to 93% of the 2019 level in December 2022. CLIVE’s ‘dynamic load factor,’ which measures the volume and weight perspectives of cargo flown as well as capacity available to provide a true indication of market performance, fell -7% pts year on year to 57%, -5% pts lower than the figure for December 2019.

“It would be easy to take a pessimistic view of the global air cargo market’s downturn, but this would ignore where it has come from. There is little use comparing it to the same time last year because then we had no Ukraine conflict, no high energy prices, no soaring interest rates, nor the impact of the subsequent cost-of-living pressures,” said Niall van de Wouw, chief airfreight officer at Xeneta.

“So, based on the global environment we see right now, airlines are still achieving rates 75% higher than pre-Covid. That indicates the glass is very much still half full. If in January 2020, you had asked airline executives if they’d like to see airfreight rates across the Atlantic or from Asia Pacific 75% higher, we would have heard a unanimous ‘yes’. The difference now is that there’s less pressure if you’re a shipper, even though you’re still paying more. In terms of the long-term sustainability of the air cargo supply chain, this will help,” he added.

In December, airfreight spot rates on high-volume corridors fell even further. Outbound Asia Pacific spot rates have fallen for eight consecutive months, with rates from Asia Pacific to North America of $5.38 per kg in December, a 13% decrease since October. This represented a -58% decrease from the previous year, but it was still 87% higher than the 2019 level.

On the Asia Pacific to Europe corridor, the average December spot rate fell 10% from October to $4.67 per kg, -46% year on year, but remained 92% above the pre-pandemic level.

In terms of the outlook, Van de Wouw believes that demand will not recover quickly due to global events. “But we do expect to see supply continuing to come back into the market. This, of course, will put additional strain on load factors and rates. So, while we don’t know where the tailwinds will come from, we still see a very efficient air cargo market, especially when compared to the 70-80% drop in ocean rates over the last eight to nine months.”

“The fact that the airfreight domain is more competitive and more fragmented on the supply side meant rates didn’t go as crazy as we saw with ocean container prices, so the decline, now airfreight volumes are lower, is more gradual. Air cargo is much stronger than it was pre-Covid, but the current direction of the market means there is some degree of good news for everyone,” he added.