According to new weekly market data from industry analysts CLIVE Data Services, part of Xeneta, volumes declined -8% year over year (y-o-y) in October and offered no current signals to indicate an upturn in 2023, as y-o-y demand fell for the eighth consecutive month. This means that Christmas hasn’t come early for the global air cargo industry.

In chargeable weight terms, the decline in demand in 2019 was likewise -3% lower than the level prior to the pandemic.

Global air cargo capacity remained -7% less than its pre-Covid 2019 level in October, while it recovered more slowly than in September. This resulted in a more muted “dynamic load factor,” a measure of airline performance used by CLIVE that takes into account both the volume and weight of the cargo transported as well as the available capacity. Over the past 18 months, load factors have decreased as dropping demand meets increasing capacity. In comparison to 2021 and 2019, the 61% dynamic load factor in October was -7% points and -1% points, respectively.

We are six weeks away from Christmas and there is no indication there will be a peak

Global airfreight spot rates decreased for the second month in a row in October, falling below levels from the previous year. Week three saw a minor increase that was mostly brought on by an increase in special cargo freight rates, while normal prices were falling.

Niall van de Wouw, chief airfreight officer at Xeneta said “We are six weeks away from Christmas and there is no indication there will be a peak. Demand worsened in October over the -5% reduction we reported in September, but this is not likely to surprise the market given the global economic outlook – although it’s clear that rates remain at a higher level than some observers would have expected in the current conditions. Airfreight is certainly not currently suffering the decline of ocean, where Xeneta has recorded rate drops of 60%-70% in the last nine months. Ocean freight is responding to the market conditions much faster than air is and normalising quickly from a rates point of view. The outlook for air cargo remains uncertain. We don’t see pressure on capacity, and we don’t see an increase in rates,”

More challenges ahead

Van de Wouw said he expects more challenges and uncertainties for the air cargo market over the next 12 months. “If you take the broader perspective, I see very few signals that would support an increase in general airfreight in 2023 – be that because people have higher personal bills or because people are spending more on services relative to goods. It is also fair to assume that even if consumers in Europe and North America were to buy exactly the same amount of goods in 2023 as in 2022, which is unlikely, then a higher portion of the transportation in support of that, whether it’s the finished products or the hard materials to make those products, is likely to move by ocean as a response to the higher reliability returning on the sea. Airfreight received a boost in the last two years because of the incredible mess on the ocean side, but shippers are now likely to feel more comfortable moving back to ocean from a reliability point of view. With all these factors combined, I don’t see where a lot of general freight growth demand drivers will come from.”

The opposite is true on the supply side 

More people are becoming comfortable with flying again and routes are opening up, leading to a rise in ‘belly-space capacity’. The freighters are being ordered and cargo conversions will be coming to the market. The only development van de Wouw said he could see slowing down the decline in rates is supply on the ground. “If airlines and cargo handling companies continue to struggle to hire people and remain short-staffed, then the bottlenecks will create upward pressure on rates because it will be difficult to get your goods through the value chain.”

According to Iata, cargo volumes continue to show increases in Africa where carriers recorded 1% growth in August this year compared to August 2021. This was a significant improvement in growth recorded the previous month (-3.5%). Capacity was 1.4% below the August 2021 levels.