Air Cargo Demand Grows in October Amid Regional Variations

Is air cargo on a rebound? That’s the question after IATA reports the third consecutive month with growth of global demand measured in cargo tonne-kilometers (CTK). October was up 3.8 percent year on year, which follows 1.9 percent in September and 1.5 percent in August. This follows months of contracted capacity. While improving, the picture is not consistent and varies by region. The strongest growth was evident in the Middle East, improving 10.9 percent compared to October 2022. Capacity was up by 15 percent year on year. The region benefitted from strong demand for the Middle East to Asia network and the Middle East to Europe, said IATA. This confirms what Mustafa Irfan Dahnkot, Vaayu Group’s Vice President of Sales and Marketing, told AirInsight at the recent Dubai Airshow: the Middle East is booming. The picture hasn’t always been that strong. In September, CTKs in the Middle East were up only 2.5 percent year on year, well behind the Asia Pacific region at 7.7 percent. August saw only 1.4 percent growth. In January, CTKs were at -11.8 percent and hit even -13.1 percent year on year in March. June was the first month of growth, albeit at just 0.5 percent. Asia Pacific leads the growth The Asia Pacific produced some recent consistency, growing CTKs by 7.6 percent in October, so slightly below the September level but up from 4.9 percent in August. Again, the start of the year looked very different, with CTKs at -19 percent in January. The turn around started in July with 0.7 percent. At 32.4 percent, this region is still the biggest in the world and has been so in the past few months. Demand in September was particularly strong on the Asia to Africa routes, which saw the highest growth number since May at 16.7 percent. Asia to the Middle East and Asia to Europe also recovered. With Chinese and Japanese carriers operating at higher capacity levels year on year, they brought in more belly capacity on passenger aircraft. Latin America saw 4.0 percent CTK growth in October, up from 2.3 percent in September, but down from 6.2 percent in August. In June, the region was even leading the world with 7.3 percent CTK growth. Capacity was up by 8.3 percent in October. Cargo demand in Africa was up by 2.9 percent, a sharp contrast to -0.1 percent in September and -4.7 percent in August if we only look at the last three months. In January, CTKs stood at -9.5 percent. October capacity was up 9.8 percent year on year. There was significant traffic between Africa and the Middle East, Europe, and Asia. Europe saw only 1 percent CTK growth in October, up from -1.5 percent in September and -0.2 percent in August. October has been the best month for a long time, with a 3.4 percent growth of tonne-kilometers within Europe and a 17.1 percent increase in the Middle East. Remember that CTKs stood at -20.4 percent in January. This leaves North America as the weakest region. CTKs were -1.8 percent year on year in October compared to -2.2 percent in September and -1.2 percent in August. But the overall line has been up since the start of the year, with -8.7 percent in January, slipping to -13.1 in April. Demand to Asia and Europe did improve but not enough to turn around the fortunes of most cargo operators. Capacity was up by just 2.4 percent. 2023 picture If we look at the average CTK numbers for 2023 until October, we can see a rising line. January CTKs were -14.9 percent year on year, February -7.5 percent, March -7.7 percent, April -6.6 percent, May -5.2 percent, June -3.4 percent, July -0.8 percent, August +1.5 percent, September +1.9 percent, and October +3.8 percent. So July is the turning point. By comparison: CTKs in 2022 were -8.0 percent compared to 2021 and 1.6 percent below 2019 levels. IATA Director General Willie Walsh is happy with the improvement, but needs to see more before he is confident of a real rebound. “Demand for air cargo was up 3.8 percent in October. That marks three consecutive months of year-on-year growth, placing air cargo on course to end 2023 on a much stronger footing than it began the year. Recovering demand, slightly stronger yields and the uptick in trade are all good news.”” “But with demand still 2.4 percent below pre-pandemic levels, and much uncertainty remaining over the trajectory of the global economy, optimism must be balanced with caution. Nonetheless, a continued strong peak year-end season will certainly help the sector to manage through whatever turns the global economy might take in 2024.” That picture is still not clear and depends on many variables, not least the numerous geopolitical issues that dominate daily headlines.

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