September Sees a Boost in Air Cargo Demand

Air freight data for September 2023 suggests continuing demand recovery, according to the International Air Transport Association (IATA). Global demand, measured in cargo tonne-kilometers, increased by 1.9% compared to September 2022 levels (+6% for international operations).

Capacity, measured in available cargo tonne-kilometers (ACTKs), was up 12.1% compared to September 2022 (+0% for international operations). This was heavily related to international belly capacity which rose 31.5% year-on-year, as airlines scaled up operations to meet peak-northern summer travel season demand.

There are also other factors that should be noted:

• In September, both the manufacturing output purchasing managers index or PMI (49.7) and new export orders PMI (47.7) saw a small improvement to August. However, they remained below 50-point threshold, indicating a continuing, but slightly slower, annual decline in global manufacturing production and exports.
• Global cross-border trade contracted for the fifth month in a row in August, decreasing 3.8% year-over-year.
• Annual growth in US consumer prices stabilized in September at 3.7%, the same rate as in August. In Europe and Japan, consumer price inflation slowed by 1.0 and 0.2 percentage points, respectively, to 4.9% and 3.0%, (respectively). In China, deflation-fighting policy measures saw an annual rise in consumer prices of 0.1%.
• In September, the average price of jet fuel was $131 per barrel, marking a 43.1% increase from the May 2023 price. Recouping some of this added cost from surcharges in September contributed to the first increase in air cargo yields since November 2022.

"Air cargo eked out modest growth (1.9%) in September despite falling trade volumes and high jet fuel prices. That clearly shows the strength of air cargo’s value proposition,” says Willie Walsh, IATA’s director general. “With the key export order and manufacturing PMIs hovering near positive territory, we can be cautiously optimistic for a strong year-end peak season."

Chart Credit: IATA

As one can gather from the chart above, North American carriers had the weakest performance in September, with a 2.2% decrease in cargo volumes. This was a decline in performance compared to August (-1.4%). Although contractions in the North America-Asia trade lane narrowed (from -4.3% in August to -1.8% in September) and the North America-Europe market stabilized its decline at (-2.5%) for the second month in a row. Capacity increased moderately by 0.2% compared to September 2022.

Reference

Air Cargo Demand up 1.9% in September, Sustaining Moderate Growth Momentum. IATA. November 8, 2023. Accessed November 20, 2023. https://www.iata.org/en/pressroom/2023-releases/2023-11-08-01/