Global Airline Cargo Demand Has Dropped 3.4% Compared To Last Year

Friday, 27 October 2023

According to the International Air Transport Association (IATA), global air cargo demand has slightly slumped by 3.4%. IATA blames this on the global inflation crisis and slackening manufacturing output.
Demand declining due to inflation

The International Air Transport Association (IATA), in its June 2023 data release on August 7, showed the smallest year-over-year contraction in demand for air cargo since February 2022. It also showed that manufacturing output plus export orders, under the Purchasing Managers Index (PMI), was below the critical 50 which shows a decline in global manufacturing production and exporting.

Inflation is hitting hard. According to the United Nations Department of Economic and Social Affairs in a June briefing, inflation is expected to ease. Furthermore, the report found,

    Stubbornly high inflation in both developed and developing countries has prompted the most aggressive interest rate hike cycle in decades, causing financial conditions to tighten and exacerbating debt vulnerabilities.

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Even the J.P. Morgan Global Composite PMI report of July 6, looking at June 2023 performance, found that the Global Composite PMI is 52.7, a mere 2.7 points above 50 or neutral. J.P. Morgan credited the small growth in PMI to the service sector. An analysis by Jingyi Pan of S&P Global Market Intelligence,

    The state of weakening demand conditions is far more severe among goods producers, however, as new order inflows into factories declined globally for a twelfth consecutive month in June and at the sharpest rate since January. A dearth of demand, coupled with the exhaustion of backlogged orders into the mid-year, led to global goods producers paring back production for the first time since January.

All of these economic issues set the stage for less air cargo demand globally.
The decline is declining

But a deeper dive into the IATA Air Cargo Analysis finds that the decline of month vs. month is the lowest since February 2022. Furthermore, there has been an improvement in the demand rate over the past six months.

There also has been growing and sufficient air cargo capacity to meet demand, but that growth in capacity is projected to slow in upcoming months despite continuing orders for airliners that have significant air cargo capacity in their bellies alongside air freighters intended to haul air cargo only. However, due to pricing, air cargo is being hit harder than maritime cargo.

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However, these conditions affect more than just air cargo. We will now review global air traffic, which focuses on passengers.
IATA: Global Air Traffic is doing OK

According to the latest IATA global air traffic report covered by Simple Flying, the airline industry has recovered from the COVID-19 pandemic and is operating at 94.2% of what it was in June 2019. Traffic, despite global inflationary pressures, is still increasing.
American, Condor and Alaska Airlines in the Same Frame
Photo: Joe Kunzler | Simple Flying

Both domestic aviation and international air traffic have been on the increase. The Asian-Pacific market has had the most growth, while North American and European markets also grew.

Source : simpleflying.com