Air Cargo Demand Surges 10.8 per cent in December

Geneva – The International Air Transport Association (IATA) released data for global air freight markets showing that air cargo demand rebounded in 2023 with a particularly strong fourth quarter performance despite economic uncertainties.

Full-year demand reached a level just slightly below 2022 and 2019.

Global full-year demand in 2023, measured in cargo tonne-kilometres (CTKs), was down 1.9 per cent compared to 2022 (-2.2 per cent for international operations). Compared to 2019, it was down 3.6 per cent (-3.8 for international operations). Capacity in 2023, measured in available cargo tonne-kilometres (ACTKs), was 11.3 per cent above 2022 (+9.6 per cent for international operations). Compared to 2019 (pre-COVID) levels, capacity was up 2.5 per cent (0.0 per cent for international operations).

December 2023 saw an exceptionally strong performance: global demand was 10.8 per cent above 2022 levels (+11.5 per cent for international operations). This was the strongest annual growth performance over the past two years. Global capacity was 13.6 per cent above 2022 levels (+14.1 per cent for international operations).

Some indicators to note include:

  • Global cross-border trade recorded growth for the third consecutive month in October, reversing its previous downward trend.
  • December inflation in both the United States and the EU as measured by the corresponding Consumer Price Indices (CPI) stayed below 3.5 per cent year-on-year. China’s CPI, however, indicated deflation for the third consecutive month, raising concerns of an economic slowdown.
  • Both the manufacturing output and new export order Purchasing Managers Indexes (PMIs) – two leading indicators of global air cargo demand—continued to hover below the 50-mark in December, usual markers for contraction.

“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 per cent, 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 Performance
Asia-Pacific airlines posted a 0.9 per cent increase in demand in 2023 compared to 2022 (-1.4% for international operations) and a capacity increase of 28.5 per cent (+16.6 per cent for international operations). In December, airlines in the region recorded the best performance of all regions, posting an 18.5 per cent increase in demand (+15.4 per cent for international operations) compared to 2022. Capacity increased 31.1 per cent (+22.9 per cent for international operations) during the same period.

North American carriers reported the worst year-on-year performance of all regions, with a 5.7 per cent decrease in demand in 2023 compared to 2022 (-4.3 per cent for international operations) and a capacity increase of 0.3 per cent (+2.7 per cent for international operations). In December airlines in the region reported a 2.0% decrease in demand (+5.9 per cent international operations), compared to 2022. Capacity increased 2.4per cent (+8.5 per cent for international operations) during the same period.

European carriers posted a 3.9 per cent decrease in demand in 2023 compared to 2022 (-4.1 per cent for international operations). During the same period, airlines posted a capacity increase of 4.5 per cent for both global and international operations. In December, airlines in the region posted an 8.6 per cent increase in demand (+8.7 per cent for international operations) compared to 2022. Capacity increased 7.4 per cent (+7.5 per cent for international operations) during the same period. Airlines in the region continued to be most affected by the war in Ukraine.

Middle Eastern carriers reported an increase in demand of 1.6% for global and international demand in 2023 compared to 2022 and an increase in capacity of 13.5 per cent (+13.6 per cent for international operations). In December airlines in the region posted an 18.3 per cent increase in demand for both global and international operations compared to 2022. Capacity increased 17.7 per cent (+17.8 per cent for international operations) during the same period.

Latin American carriers posted the strongest year-on-year performance of all regions, with a 2.0 per cent increase in demand in 2023 compared to 2022 (+1.9 per cent for international operations). During the same period, airlines posted a capacity increase of 13.2 per cent (+16.9 per cent for international operations). In December airlines in the region posted growth in demand of 6.4 per cent (+6.3 per cent for international operations) compared to 2021. Capacity grew 3.5 per cent (+4.2 per cent for international operations) during the same period.

African airlines reported a decrease in demand of 1.8 per cent (-2.0 per cent for international demand) in 2023 compared to 2022 and an increase in capacity of 5.6 per cent (+5.0 per cent for international operations). In December airlines in the region posted the weakest performance of all with a 1.2 per cent decrease in demand (-1.4 per cent for international operations) compared to 2021. Capacity grew 7.4 per cent (+6.8 per cent for international operations) during the same period.

Red Sea Disruption
In November and December air cargo experienced a modest rise in demand and yields due to disruptions in the Red Sea. The following was observed when comparing data for the week commencing 4 November 2023 and the week ending 9 December 2023:

• a 1 per cent increase in global air cargo demand coupled with a 5 per cent rise in yields;

• in the Asia-Pacific region, demand grew by 2 per cent and yields by 6 per cent;

• a 1 per cent increase in demand between China and the rest of the world and an 11 per cent increase in yields;

• Europe’s demand remained steady, but yields increased by 3 per cent;

• in the Middle East, demand was constant with a 4 per cent rise in yields.
Data for the last half of December showed a normalization of 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.