Global air cargo demand continues to decline in line with overall container demand, according to preliminary figures from WorldACD Market Data.
In the first two weeks of April 2023, the chargeable weight on cargo aircraft compared to the overall global air cargo market decreased by 12 percent year-on-year. This represented a return to the double-digit percentage declines seen in the previous five months to March – during which weight fell 8 percent year-on-year.
Figures for the week of April 10-16 show a continuation of the declining trend in air cargo tonnages seen since mid-March, with a week-on-week decline of just 2 percent compared to an 8 percent drop recorded on April 3 reported more than 400,000 weekly transactions covered by WorldACD data.
Flights departing North America (down 25 percent) and Europe (down 18 percent) saw a notable year-over-year percentage decline in tonnage.
Total air cargo capacity is up 12 percent compared to 2022, with double-digit percentage increases from nearly all regions except Central and South America, which declined slightly at 2 percent, and North America, which saw a 5 percent increase. The most notable increases were flights from Asia Pacific (33 percent) and Africa (19 percent).
Global air freight rates fell 37 percent below their levels a year ago to average $2.56 per kilogram in the week of April 10-16, despite the impact of higher fuel surcharges, although they remain well above pre-Covid levels . Prices have fallen 6 percent over the past four weeks, when they stood at $2.73 a kilogram. In the comparable week in 2022, air freight rates averaged $4.11 per kilogram.
Comparing the weeks of April 3-9 and April 10-16 to the previous two weeks, total tonnages fell 9 percent from the combined totals and average global rates fell 4 percent, with capacity stable. At this same level of comparison, the capacity levels have remained the same.
At the regional level, the “two-week-over-two-week” downward trend in air cargo tonnages from all major origin regions and routes is visible, particularly for flows from Europe – specifically to Central and South America (a 21 percent drop), Africa (down 17 percent), North America (down 16 percent), Asia Pacific (down 14 percent), and Middle East and South Asia (down 14 percent).
This relatively sharp drop in tonnage flying out of Europe is partly due to the Easter holiday. Significant declines were also observed in flows from the Middle East and South Asia to Asia-Pacific and in goods from North America to Europe – both registering an 18 percent drop in tonnage.
In terms of pricing, average rates show a positive trend for goods flown into North America from Central and South America, rising 1 percent. This is the only lane where freight rates have increased, while all other lanes have seen rates fall. The most notable decline was seen from the Middle East and South Asia to Asia-Pacific, with a 23 percent decline.
The second largest significant decreases in freight rate were 7 percent in three trade routes: North America to Asia-Pacific, North America to Europe, and Europe to Central and South America.
IATA outlines air cargo priorities for 2023
As rates continue to fall, the International Air Transport Association (IATA) has identified three priorities to enable the air cargo industry to maintain momentum despite the challenging operating environment.
Speaking at the 16th World Cargo Symposium (WCS) in Istanbul, Brendan Sullivan, Global Head of Cargo at IATA, said companies need to focus on sustainability, digitization and security as the key imperatives to consider over the next six years.
“Air Freight is a different industry than the one that entered the pandemic. Revenue is higher than before the pandemic. Yields are higher,” said Brendan Sullivan, IATA’s Global Head of Cargo. “The world has learned how critical supply chains are. And air freight’s contribution to airline bottom lines is more evident than ever. Yet we are still connected to the business cycle and global events. Such is the war in Ukraine, uncertainty about where critical economic factors such as interest rates, exchange rates and job growth are worries that are real for the industry today. As we navigate the current situation, air cargo priorities have not changed, we must continue to focus on sustainability, digitization and security.”
IATA, which represents some 300 airlines covering 83 percent of global air travel, found that Sustainable Aviation Fuel (SAF) is critical to meeting the aviation industry’s long-term goal (LTAG) of net-zero carbon emissions by 2050 achieve, in line with the industry commitment adopted in 2021.
While 65 percent of the CO2 reduction will come from SAF, IATA says production levels remain difficult. The association calls on the government to create incentives for production.
“SAF is being produced. And every single drop is used. The problem is that the quantities are small. The solution is government incentives,” Sullivan said. “By incentivizing production, we could see 30 billion liters of SAF available by 2030. It’s a long way from where we need to be. But it would be a clear turning point toward our net zero ambition of abundant SAF volumes at affordable prices.”
IATA outlined three other areas where it is working to support the industry’s energy transition, including: supporting effective carbon calculations and offsets; Extension of the IATA environmental assessment (IEnvA) to airports, cargo handling facilities, freight forwarders and dock handlers; and developing environmental, social and governance (ESG) related metrics to break through the many methods floating around with ESG Metrics Guidance for Airlines.
The association also outlined three digitization goals for the aviation industry, as space players want to continuously improve their efficiency.
For one, IATA aims to have 100 percent of airlines on its One Record freight digitization platform by January 2026. This initiative aims to replace the many data standards for shipping documents with a single record for each shipment. The IATA Cargo Services Conference on Sunday agreed to achieve 100 percent airline capability by January 1, 2026, and the association’s Cargo Advisory Council supports this vision.
The organization said it wants to ensure digital standards are in place to support the global supply chain and that compliance with and support for customs, trade facilitation and other government processes are becoming increasingly digital.
Beyond sustainability and digitization, IATA outlined three security priorities for air cargo, noting that lithium batteries caused 62 smoke and fire-related incidents at airports and airplanes in 2022, according to the Federal Aviation Administration (FAA).
“In addition to sustainability and efficiency, there is safety. Lithium batteries continue to dominate the air freight agenda. A lot has been done. But honestly, it’s still not enough,” Sullivan said.
IATA recommends that civil aviation authorities take strong action against shippers who fail to declare lithium batteries in cargo or mail. In addition, the association wants to promote the development of a test standard for fire-resistant aircraft containers with a fire from lithium batteries.
Finally, the organization wants to ensure that world governments recognize a single standard for identifying all lithium battery-powered vehicles, effective January 1, 2025.
“Air freight is an extremely important industry. It helps build a better future for the people of the world. It is an industry that saves lives and helps and provides assistance to those in need. Industry has mobilized to support those affected by the earthquakes in Syria and Türkiye,” Sullivan concluded. “Working together to ensure air freight remains a reliable and efficient means of assisting those in need, while strengthening our global supply chains and contributing to the sustainable development of our economies is vital.”