Geneva – The International Air Transport Association (IATA) released October 2023 global air cargo market data, revealing encouraging signs of recovery for the industry. Global air cargo demand, measured in cargo tonne-kilometers (CTK), increased by 3.8% year-over-year, marking the third consecutive month of positive growth and establishing a more solid foundation for the air cargo sector as 2023 comes to a close. International cargo demand grew by 3.5%, further indicating a gradual recovery in global trade.
Capacity Expansion Driven by Passenger Market Recovery
Available cargo capacity (ACTK) rose by 13.1% year-over-year, with international capacity increasing by 11.1%. This significant growth was primarily fueled by the continued release of belly-hold capacity from passenger flights. As international passenger markets recover strongly, airlines have been able to increase flight frequencies and route coverage, injecting new vitality into the cargo market. International capacity consequently surged by 30.5%, providing robust support to meet growing cargo demand.
Notably, October air cargo volumes grew by 2.6% month-over-month, continuing the upward trend from September and significantly exceeding pre-pandemic levels. This data suggests the air cargo market is experiencing strong recovery momentum, boosting confidence in the industry's future development.
IATA Director General: Cautious Optimism Amid Challenges
Willie Walsh, IATA's Director General, stated: "The 3.8% year-on-year increase in October marks the third consecutive month of growth and sets the stage for air cargo to yield a stronger 2023 than previously expected. The recovery in demand, slight yield improvements and trade rebound are positive developments. However, we must maintain cautious optimism as demand remains 2.4% below pre-pandemic levels and significant economic uncertainties persist."
He added: "A strong and sustained year-end peak season will undoubtedly help the industry navigate potential economic changes in 2024."
Complex Operating Environment Presents Challenges and Opportunities
Despite the recovery trend, the operating environment remains complex. Economic activity slowed in major economies during October. Outside the US, production and new export order indices in Purchasing Managers' Indexes (PMIs) remained below the critical 50-point threshold, indicating deteriorating economic conditions.
Inflation rates in major developed economies continued to decline from Consumer Price Index (CPI) peaks, with October figures at 3% for the US and 4% for the EU. However, China's CPI showed deflation for the second time this year, raising concerns about potential economic recession.
Global trade stabilized in September after a declining trend. While below 2022 peaks, international trade remains more than 5% above pre-pandemic levels. These factors collectively influence the air cargo market's trajectory, presenting both challenges and opportunities.
Regional Market Performance Varies Significantly
Airline performance in the cargo market varied substantially by region:
Asia-Pacific Leads Growth
Asia-Pacific airlines saw a 7.6% year-over-year increase in cargo volumes, nearly matching September's 7.7% growth. Carriers benefited from sustained growth on three key trade routes: Africa-Asia (+16.7%, the largest year-over-year increase since May), Middle East-Asia (+10.3%), and Europe-Asia (+8.5%). Capacity grew 30.0% year-over-year as passenger operations recovered.
North America Lags Behind
North American carriers posted the weakest performance with a 1.8% year-over-year decline, though slightly better than September's 2.2% decrease. Despite marginal improvements on North America-Asia and North America-Europe routes, regional airlines saw no significant gains. Capacity increased 2.4% year-over-year.
Europe Shows Gradual Recovery
European airlines reported 1.0% year-over-year growth in October, improving from September's 1.5% decline. The intra-Europe market saw its first growth since January 2022 (+3.4% in October vs -4.2% in September). Middle East-Europe route expansion (+17.1%) also benefited regional operators. Capacity grew 7.0% year-over-year.
Middle East Outperforms
Middle Eastern carriers led the market with 10.9% year-over-year growth, significantly improving from September's 2.5% increase. Airlines benefited from Middle East-Asia (+10.3%) and Middle East-Europe (+17.1%) market growth. Capacity rose 15% year-over-year.
Latin America and Africa Show Positive Trends
Latin American airlines grew 4.0% year-over-year, up from September's 2.3%. October capacity increased 8.3% year-over-year. African carriers saw 2.9% year-over-year growth in October, rebounding from September's 0.1% decline, with capacity 9.8% above October 2022 levels.
Sustainability: The Future of Air Cargo
The industry's sustainability efforts are gaining importance, with airlines adopting measures to reduce carbon emissions and improve energy efficiency. These include using Sustainable Aviation Fuel (SAF), optimizing flight routes, deploying more efficient aircraft, and implementing carbon offset programs.
Collaboration across the supply chain remains crucial for building efficient, reliable cargo networks through digital transformation, optimized ground operations, and enhanced information sharing.
Conclusion: Navigating Challenges Toward Sustainable Growth
The global air cargo market continues its uneven recovery, with Asia-Pacific driving growth while other regions face challenges. Economic uncertainties, geopolitical risks, and sustainability requirements present complex hurdles. Airlines that adapt to market changes, embrace innovation and prioritize sustainability will be best positioned for long-term success in this evolving industry landscape.