Global cargo demand drops 13.7% as headwinds persist
Global air cargo market has recorded a marginal drop in demand as economic headwinds persist.
The International Air Transport Association (IATA), in the data for November 2022 released recently, showed that demand fell by 13.7 per cent, compared to November 2021.
Capacity was 1.9 per cent below November 2021. This was the second year-on-year contraction following the first, last month (in October) since April 2022. International cargo capacity decreased 0.1 per cent compared to November 2021.
Compared to pre-COVID-19 levels (November 2019), there was a smaller contraction in overall demand (-10.1 per cent), while capacity was down 8.8 per cent.
Notably, global new export orders, a leading indicator of cargo demand, were stable in October. For major economies, new export orders are shrinking except in Germany, the U.S., and South Korea, where they grew.
Global goods trade expanded by 3.3 per cent in October. Given the softening in air cargo demand, this suggests that maritime cargo was the primary beneficiary. The U.S. dollar has appreciated sharply, adding cost pressure as many costs are denominated in U.S. dollars. This includes jet fuel, which is already at elevated levels.
Also, the Consumer Price Index for G7 countries decreased from 7.8 per cent in October to 7.4 per cent in November, the largest month-on-month decline in 2022. Inflation in producer (input) prices reduced to 12.7 per cent in November, its lowest level so far in 2022.
IATA’s Director General, Willie Walsh, noted that resilience in the face of economic uncertainties is demonstrated with demand being relatively stable on a month-to-month basis.
“But market signals are mixed. November presented several indicators with upside potential: oil prices stabilised, inflation slowed and there was a slight expansion in goods traded globally. But shrinking export orders globally and China’s rising COVID cases are cause for careful monitoring,” Walsh said.
At the regional performance end, African airlines saw cargo volumes decrease by 6.3 per cent in November 2022 compared to November 2021. This was an improvement in performance compared to the previous month (-8.3 per cent). Capacity was 11.4 per cent below November 2021 levels.
Their counterparts in the Asia-Pacific region saw air cargo volumes decrease by 18.6 per cent in November 2022 compared to the same month in 2021. This was the worst performance of all regions and a decline in performance compared to October (-14.7 per cent). Airlines in the region continue to be impacted by lower levels of trade and manufacturing activity and disruptions in supply chains due to China’s rising COVID cases. Available capacity in the region decreased by 4.5 per cent compared to 2021.
North American carriers posted a 6.6 per cent decrease in cargo volumes compared to the same month in 2021. This was an improvement in performance compared to October (-8.6 per cent). Capacity increased 0.3 per cent compared to November 2021.
European carriers saw a 16.5 per cent decrease in cargo volumes in November 2022 compared to the same month in 2021. This was an improvement in performance compared to October (-18.8 per cent), thanks to the stronger new export orders in Germany. Airlines in the region continue to be most affected by the war in Ukraine. High inflation levels, most notably in Türkiye, also affected volumes. Capacity decreased 6.6 per cent in November 2022 compared to November 2021.