A complicated outlook for air cargo

At the World Cargo Symposium in Istanbul, Dr. Bojun Wang, IATA Economist, explored the key economic drivers behind air cargo’s performance.


The sector is loosely tied to global GDP, which went from 6.3% in 2021 to 3.4% in 2022.  The slowdown is expected to continue this year. The headline figure masks some notable regional differences, however. The United States is expected to grow 1.3%, for example, while key European countries—such as Germany and the United Kingdom—could even slip into recession.

In general, advanced economies will be more affected by the slowing down of global GDP than most emerging countries. The good news for all, though, is that inflation looks to have peaked.

Other air cargo trends are reverting back to normal after the sector’s phenomenal performance in 2021. Again, there are regional inconsistencies. Latin America did better in 2022 than in 2021, for example, likely due to the differing timelines and responses in the pandemic.

Overall, more capacity is coming back into market, especially through bellyhold, and this could affect yields and load factors. Although yields are still higher than 2019, they are expected to decline 23% in 2023. But Wang stressed this must be seen in the context of huge gains during the pandemic. The price of jet fuel is also a factor in yields, and this may yet have an effect.

Wang also noted that even though bellyhold is behind capacity increases, as a percentage it is carrying less cargo than used to be the case compared with dedicated freighters. What was traditionally a roughly 50/50 split has now edged 70/30 in favor of dedicated freighters. This may yet right itself as the passenger network resumes normality.

Pressure on operating costs remain despite the slow down in inflation and the fuel crack spread is still high and prices for crude are beginning to rise. Other risks include war in Ukraine, costs related to climate change, and isolated health crises.

It means cargo revenue is still moderating from pandemic highs but, again, Wang stressed that this must be seen in context and that overall performance is still better than 2019 with several causes for optimism, including a burgeoning e-commerce sector.


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