Airfreight market should improve by Q4, AfA reports

Global air cargo chargeable weight flown in the first quarter of 2023 dropped 11% compared with the previous year, according to a report released today by the Airforwarders Association . [caption id="attachment_57133991" align="alignright" width="300"] (Photo/Los Angeles World Airports)[/caption] Despite these lower volumes , however, by Q4 the market should be strong during its peak due to increased passenger demand, Airforwarders Association (AfA) executive director Brandon Fried said in the report. “We’re coming down from the lofty volumes seen during the pandemic, which we all know were not sustainable long term,” Fried said. “But we’re not crashing; we’re normalizing. We need to be bullish in the second half; consumers are still out there spending and passengers are flying.” Q1 overall tonnage dropped 16% for Asia-Pacific and 18% for North America, the report indicates. “Traditionally, the trans-Atlantic air cargo market had predominantly been satisfied by the significant amount of belly capacity that operated on the route,” Glyn Hughes , director general of TIACA, told Air Cargo Next . “During the COVID-induced slowdown in passenger traffic, we saw considerable reduction in belly capacity, which was replaced by an increase in freighters operating between the main trans-Atlantic gateways.” Trans-Pacific routes for air cargo are different due to the sizeable number of exports from Asia to the United States, Hughes said. “The Chinese slowdown in production as a result of COVID-zero tolerance and global economic conditions, coupled with government-induced severely restricted passenger activity, resulted in reduced demand and reduced capacity,” he said. “It’s only since earlier this year did we see demand pick up but still significantly below pre-COVID levels. With China reopened and passenger traffic starting to recover, we can expect some belly capacity increase; but with subdued demand on these trade lanes, we can also expect further yield reductions.” Due to increased housing and energy costs, consumers remain cautious, Hughes said. Because of this, some markets remain historically higher while others are stabilizing, which has resulted in higher inventories , he added. “We anticipate that this increase in overall capacity coupled with the continued weakened demand will result in further downward pressure on cargo yields,” Hughes said. “This situation is unlikely to reverse until late this year and into 2024.” Cautiously optimistic for 2024 Deutsche Post DHL Group expects the market to decline this summer, with recovery taking longer than the AfA report indicates, Andreas Von Pohl , vice president for airfreight for the Americas region, DHL Global Forwarding , told Air Cargo Next . “We see the demand continue to be sluggish in Q2 and do not see a fast recovery,” he said. “That may further depress rates as we go through the summer, but we also expect additional freighter capacity to come out of the market if the revenue cannot cover the operation cost.” While recovery may be slow, increased passenger demand is positive for shippers, Southwest Airlines Cargo and Charters Vice President Wally Devereaux told Air Cargo Next . Southwest’s operations have not been severely affected, he said. “In very general terms, Southwest’s flights schedule will continue to grow over the summer, adding capacity in a number of markets across our system, which will be good for shippers,” Devereaux said. “Regarding general economic conditions and the impact on our cargo business, we haven’t seen significant changes in our volume patterns thus far, but it is something we’re keeping an eye on.” The market should improve, even if it does not happen until sometime next year, Fried said in the report. “We have a new baseline, and we need to stop comparing to before the pandemic,” Fried said. “It’s a new world. We’re seeing a new geographical order: the war in Ukraine, the rising labor costs, Chinese manufacturers moving out of China to elsewhere in Asia, South America, Mexico. ... A different political structure will have a significant impact on supply chains.”

Airfreight market should improve by Q4, AfA reports

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