Air cargo markets around the world maintained double-digit year-on-year growth so far this year, latest data from International Air Transport Association (IATA) reveal.
Total demand, measured in cargo tonne-kilometres (CTKs), rose by 14.7% compared to May 2023 levels (15.5% for international operations).
This is the sixth consecutive month of double-digit year-on-year growth, IATA noted.
Capacity, measured in available cargo tonne-kilometres (ACTKs), increased by 6.7% compared to May 2023 (10.2% for international operations).
Air cargo demand moved sharply upwards in May across all regions, IATA noted. The sector benefitted from trade growth, booming e-commerce and capacity constraints on maritime shipping.
Middle Eastern carriers saw 15.3% year-on-year demand growth for air cargo in May. The Middle East–Europe market performed particularly well with 33.8% annual growth, ahead of Middle East-Asia which grew by 18.6% year-on-year. May capacity increased 2.7% year-on-year.
Asia-Pacific airlines saw 17.8% year-on-year demand growth for air cargo in May. Demand on the Africa-Asia trade lane grew by 40.6% year-on-year, while the Europe-Asia, within Asia and Middle East-Asia trade lanes rose by 20.4%, 19.2% and 18.6% respectively. Capacity increased by 8.4% year-on-year.
Trade growth is clearly mirrored on the latest figures vis-a-vis industrial production, a measure of the output generated by industrial sectors such as mining, manufacturing, and utilities, recorded a small 0.5% rise over the previous month.
Compared to 2023, the indicator pointed at expansion with an annual growth rate of 2.7%, thus marking the continuation of the moderate upward trend seen over the past years, which is also in line with pre-pandemic trends (2012-2019).
Global cross-border merchandise trade also displayed expansions both month-on-month and year-on-year in April, with readings of 1.5% and 1.8%, respectively.
In particular, April delivered the second month of positive annual growth in 2024 after February. This is an encouraging signal in a strained business environment that continues to be impacted by inflation, impaired supply chains, geopolitical tensions, and rising cross-border trade restrictions.
The Purchasing Managers’ Index (PMI) gauges economic trends in manufacturing and services. For example, a PMI above 50 suggests that more purchasing managers expect their business to grow compared to the previous month, while a figure below 50 indicates fewer managers with that outlook.
Specifically, the manufacturing output and new export order PMIs are two leading indicators of global air cargo demand.
The new export orders PMI, an indicator that can be understood as a measure of the perceived well-being of international trade, signalled expansion in May with a reading of 50.4 points (down from 50.5 in April).
This, IATA noted is the second optimistic reading after the global indicator moved past the critical 50-point benchmark for the first time in over two years in April.
It represents an encouraging signal that is aligned with the upward evolution of global merchandise trade discussed earlier (for April). As for the regional perspective, China and the US continued to experience optimistic expectations for new export orders last month, as they have for most of 2024.
On the other hand, readings in Europe and Japan maintained their signals of contraction, although Europe exhibited the smallest contraction since early 2022.
IATA Director General Willie Walsh noted: “Air cargo demand moved sharply upwards in May across all regions. The sector benefitted from trade growth, booming e-commerce and capacity constraints on maritime shipping. The outlook remains largely positive with purchasing managers showing expectations for future growth.
“Some dampening, however, could come as the US imposes stricter conditions on e-commerce deliveries from China. Increased costs and transit times for shipments under $800 may deter US consumers and pose significant challenges for growth on the Asia-North America trade lane—the world’s biggest.”
Pratap John is Business Editor at Gulf Times. Twitter handle: @PratapJohn