IATA data reveals weak global air cargo market in May 2023

The International Air Transport Association (IATA) has released its latest data on global air cargo markets for May 2023, revealing unfavourable market conditions.

In May 2023, global demand for air cargo, measured in cargo tonne-kilometres (CTKs), declined by 5.2% compared to the same period in 2022. International operations experienced an even larger drop of 6.0%.

However, there was a significant increase in capacity during this period. Available cargo tonne-kilometres (ACTKs) rose by 14.5% compared to May 2022, primarily driven by the increase in belly capacity resulting from the recovery of demand in the passenger business. In fact, the current capacity level is 5.9% higher than that of May 2019, before the pandemic struck.

Several factors have influenced this decline in demand. The global manufacturing Purchasing Managers Index (PMI) suggests a yearly contraction of 1.4% in new export orders, along with a 5.2% decrease in the production PMI. These figures indicate a cooling in global manufacturing demand.

Additionally, global goods trade experienced a decrease of 0.8% in April due to macroeconomic challenges and supply chain constraints. During this time, container shipping demand contracted by 0.2%, while air cargo demand weakened by 6.3% year-on-year. Maritime cargo seemed to be favoured in trading conditions.

In a positive development, the global supplier delivery time PMI increased to 54.5 in May, up from a low of 35 in October 2021. This indicates shorter delivery times and some relief for supply chains. However, it also reflects weaker global goods trade demand.

Willie Walsh, the Director General of IATA, acknowledged the challenging trading conditions for air cargo. He mentioned the 5.2% decline in demand and various economic indicators pointing towards weakness. Nonetheless, he expressed optimism for the second half of the year, expecting improvements. As inflation eases in many markets, it is widely anticipated that central banks will reduce rate hikes. This should stimulate economic activity and have a positive impact on the demand for air cargo.

May regional performance:

Asia-Pacific airlines saw their air cargo volumes decrease by 3.3% in May 2023 compared to the same month in 2022. This was a decrease in performance compared to April (-0.3%), mainly due to the stronger annual contraction in international air cargo demand from -3.5% in April to -6.4% this month. Available capacity in the region increased by 38.3% compared to May 2022 as more belly capacity came online from the passenger side of the business.

North American carriers saw the weakest performance of all regions for the third consecutive month with an 8.1% decrease in cargo volumes in May 2023 compared to the same month in 2022. This was a slight improvement in performance compared to April (-12.4%). Notably, airlines in the region saw the third month of double-digit contractions in volumes on the North America-Europe trade lane (-10.3%). Capacity increased 1.2% compared to May 2022.

European carriers experienced a 6.7% decrease in cargo volumes in May 2023, compared to the same month in 2022. This was an improvement in performance compared to April (-7.7%), in part due to the smaller annual contraction in international CTKs on the Europe-Middle East trade lane, from -4.7% in April to -2.9% in May. The decline in international cargo traffic on markets within-Europe also improved from -16.2% in April to -7.8% this month (seasonally adjusted). Meanwhile, capacity increased 5.6% in May 2023 compared to May 2022.

Middle Eastern carriers experienced a 3.1% year-on-year decrease in cargo volumes in May 2023. This was a slight improvement in performance compared to the previous month (-6.7%). Capacity increased 15.6% compared to May 2022.

Latin American carriers had the only positive performance in May 2023 posting a 3.6% increase in cargo volumes compared to May 2022. This was an improvement in performance compared to April (-1.6%). Capacity in May was up 14.7% compared to the same month in 2022.

African airlines posted a 2.4% decrease in demand compared to May 2022. This was a decline in performance compared to the previous month (-0.9%). Notably, the growth on the Africa to Asia trade route slowed significantly in May from 18.5% in April to 11.0%, possibly due to the impact of the conflict in Sudan since mid-April. Capacity in May was up 9.2% compared to the same month in 2022.