Global demand, measured in cargo tonne-kilometres (CTKs), fell 3.4% in June compared to June 2022 (-3.7% for international operations), according to the International Air Transport Association (IATA).
For the half year, demand slid 8.1% compared to the January-June period of 2022 (-8.7% for international operations). However, demand in June was only 2.4% below June 2019 levels (pre-pandemic).
Capacity, as measured by available cargo tonne-kilometres (ACTKs), rose 9.7% compared to June 2022, which was a slower rate compared to the double-digit growth recorded between March and May.
This reflects strategic capacity adjustments airlines are making amid a weakened demand environment. Capacity for the first half of 2023 was up 9.9% compared to a year ago. Capacity is now 3.7% above June 2019 (pre-pandemic) levels.
Middle Eastern carriers posted a 0.5% increase in cargo volumes in June 2023 versus a year ago. This was a strong turnaround from the 2.9% year-over-year decline registered in May.
Capacity rose 11.1% for the month.
Both Middle East-Asia and Middle East-Europe route areas saw annual growth. For the first half of the year, cargo demand was down 5.6% compared to a year ago, with an 11.2% hike in capacity.
Key factors influencing air cargo demand, IATA noted, include a decline in global manufacturing production and exports.
In June, both manufacturing output Purchasing Managers Index or PMI (49.2) and new export orders PMI (47.1) were below the critical threshold represented by the 50 mark.
Global cross-border trade decreased by 2.4% year-on-year in May, reflecting the cooling demand environment and challenging macroeconomic conditions.
The difference between the annual growth rates of air cargo and the global goods trade narrowed to -2.6 percentage points in May, representing the smallest gap since January 2022.
However, the gap still suggests that air cargo continues to suffer more than container cargo from the slowdown in global trade.
Obviously, a decrease in manufacturing output will have a direct impact on air cargo demand, as air freight is often used for transporting raw materials, intermediate goods, and finished products between different stages of the manufacturing process.
Inflation erodes consumers' purchasing power, leading to reduced spending on non-essential goods. This particularly affects the demand for high-end consumer products and electronics that are often transported via air cargo.
Analysts say stubbornly high inflation in both developed and developing countries has prompted the most aggressive interest rate hike cycle in decades, causing financial conditions to tighten and exacerbating debt vulnerabilities. This continues to impact global trade, air cargo in particular.
Reduced consumer spending, shifts in priorities for perishable goods, decreased business investments, disruptions in supply chains, and lower demand for manufacturing-related shipments all contribute to a decrease in air cargo demand.
Undoubtedly, the combination of a global inflation crisis and declining manufacturing output lead to a complex interplay of factors affecting air cargo demand.
“We remain hopeful that the difficult trading conditions for air cargo will moderate as inflation eases in major economies. This, in turn, could encourage the central banks to loosen the money supply, which could stimulate greater economic activity,” said Willie Walsh, IATA’s director general.
