Experts expect boost in airfreight in 2024

Air cargo experts expect the industry to improve in 2024 after a challenging 2023 but they debate the level of recovery. “I anticipate a robust and dynamic air cargo market in 2024, characterized by steady growth in demand for freight services,” Airforwarders Association Executive Director Brandon Fried told Air Cargo Next . “The global economy is showing signs of recovery from recent challenges, leading to increased trade activities. We are already seeing an increase in U.S. imports from Asia, a sign that consumer demand is recovering.” Fried said post-pandemic economic recovery and expanding e-commerce will play a large role in this market recuperation. “As countries rebound from the impact of the pandemic, businesses are likely to resume and expand their operations, resulting in heightened demand for air cargo services,” Fried said. “The continued growth of e-commerce is another significant driver. Consumers’ increasing reliance on online shopping translates into a higher volume of goods being shipped internationally, driving the need for efficient airfreight solutions.” E-commerce aids airfreight market Surging e-commerce volumes are already making an impact, with e-commerce from Hong Kong and China increasing global air cargo demand by 5% year over year in November, according to a recent release from ocean and airfreight rate analytics platform Xeneta . Still, Xeneta analysts remained doubtful that booming e-commerce will balance challenges such as low rates and over-capacity. “We don’t see November’s data as a fundamental shift in the economy nor the outlook for 2024 for the global air cargo market,” Xeneta Chief Airfreight Officer Niall van de Wouw said in the release. “Seasonality means volumes are up, admittedly slightly more than we expected, but the figures also look better than they really are because November last year was disappointing for airlines and forwarders alike. More than anything else, what we saw this November was air cargo’s growing dependency on e-commerce.” But van de Wouw questions how long this e-commerce boost will last and what its effect will be in 2024. “Airfreight is a key part of the e-commerce model because it relies on speed,” he said. “This need for capacity is creating quite a bit of havoc in the market, but this is a local shift and not a bellwether for a changing global economic tide. It is more related to U.S. and European consumers buying more lower-value goods from these vendors. “The improvement is not being driven by an increase in shipments of higher-value products, and this is a worry for airlines and forwarders,” he said. “E-commerce produces big volumes but how can you, in a sustainable manner, deliver an $8 T-shirt to someone’s doorstep from China to the U.S. and make money across the entire supply chain? Even the vendors delivering these goods question its long-term viability.” Nevertheless, Xeneta forecasted last month that the airfreight market will return to “classic seasonality” in 2024, though demand may remain muted and the market may remain “wobbly.” Possible good news for carriers IATA predicted this month that airline industry net profits will reach $25.7 billion in 2024, a 2.7% net profit margin. This is a slight improvement over 2023, which is expected to show a $23.3 billion net profit with a 2.6% net profit margin. Total revenues in 2024 are expected to grow 7.6% YoY to a record $964 billion, according to IATA . Cargo volumes are expected to be 58 million tonnes in 2023 and 61 million tonnes in 2024, IATA projected. “Considering the major losses of recent years, the $25.7 billion net profit expected in 2024 is a tribute to aviation’s resilience,” IATA Director General Willie Walsh said in a release. “From 2024, the outlook indicates that we can expect more normal growth patterns for both passenger and cargo.” IATA predicts 2024 cargo revenues to be $111 billion. While this is down significantly from the 2021 peak of $210 billion, it is above the 2019 revenues of $101 billion. Yields will continue to be constrained by growing belly capacity, triggered by recovering passenger travel and international trade stagnation, IATA stated. Be prepared With better but still not gangbuster markets expected for 2024, industry members must prepare by investing in technology, enhancing agility and resilience, and growing sustainable practices, according to Fried. “Embrace and invest in advanced technologies such as blockchain, Internet of Things and AI to enhance operational efficiency,” Fried said. “Leveraging these technologies can streamline processes, reduce delays and improve overall supply chain visibility.” Freight forwarders and others in the industry must also prioritize resilience — a lesson learned from the uncertainties of the pandemic. “This involves having contingency plans for disruptions, diversifying supplier networks and adopting flexible logistics strategies,” Fried said. As for sustainability, Fried recommends incorporating eco-friendly initiatives into operations by using fuel-efficient vehicles, investing in sustainable logistics solutions and supporting industrywide efforts to reduce the carbon footprint. He also stressed the importance of monitoring the legislative and regulatory landscape.

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