IATA released data for global air cargo markets showing slower growth in January 2022. Supply chain disruptions and capacity constraints, as well as a deterioration in economic conditions for the sector dampened demand.

Global demand, measured in cargo tonne-kilometers (CTKs*), was up 2.7% compared with January 2021 (3.2% for international operations). This was significantly lower than the 9.3% growth seen in December 2021 (11.1% for international operations). Capacity, meanwhile, was 11.4% above January 2021 (10.8% for international operations). Though this is in positive territory, compared with pre-COVID-19 levels, capacity remains constrained, 8.9% below January 2019 levels.

Supply chain disruptions as well as a deterioration in economic conditions for the sector are slowing growth. Several factors should be noted:

  • Supply chain disruptions resulted from flight cancellations due to labor shortages, winter weather and to a lesser extent the deployment of 5G in the USA, as well as the zero-COVID policy in mainland China and Hong Kong. 
  • The Purchasing Managers’ Index (PMI) indicator tracking global new export orders fell below the 50-mark in January for the first time since August 2020, indicating that a majority of surveyed businesses reported a fall in new export orders. 
  • The January global Supplier Delivery Time Purchasing Managers Index (PMI) was at 37.8. While values below 50 are normally favorable for air cargo, in current conditions it points to delivery times lengthening because of supply bottlenecks. 
  • The inventory-to-sales ratio remains low. This is positive for air cargo as it means manufacturers may turn to air cargo to rapidly meet demand. 

“Demand growth of 2.7% in January was below expectation, following the 9.3% recorded in December. This likely reflects a shift towards the more normal growth rate of 4.9% expected for this year. Looking ahead, however, we can expect cargo markets to be impacted by the Russia-Ukraine conflict. Sanction-related shifts in manufacturing and economic activity, rising oil prices, and geopolitical uncertainty are converging. Capacity is expected to come under greater pressure and rates are likely to rise. To what extent, however, it is still too early to predict,” said Willie Walsh, IATA’s Director General.

 

Credit | iStock
Top