Air cargo demand and pricing stabilizing

Preliminary figures for March indicate that global air cargo demand and pricing may be starting to stabilize, with average rates holding firm at around 50 percent above pre-Covid levels.

Year-on-year (YoY) tonnages fell eight percent in March – compared with double-digit percentage declines in the final quarter (Q4) of 2022 and in early 2023, according to WorldACD Market Data.

Initial WorldACD figures indicate that Q1 2023 is looking at an 11 percent YoY drop in tonnages, compared with 13 percent for Q4 2022, with March’s eight percent YoY decline pointing towards a deceleration of the recent pattern of YoY volume decline.

Despite softening in the last 12 months from the exceptionally high demand and pricing levels the previous year, the international air cargo market remains relatively strong in historical terms, with early 2023 worldwide revenues still the third-highest achieved in the last 15 years, figures and analysis from WorldACD reveal.

Supply chain corrections

Although average air freight yields and total revenues remain high by historic standards, overall global tonnages have dropped back to around their levels in 2015 and 2016. Freight forwarding and shipper reports suggest that this may partly reflect an adjustment of inventory levels following restocking that took place in early 2022 in response to congestion and anticipated congestion in ocean freight supply chains, plus softer and unpredictable consumer demand in some sectors.

Various sources believe the current relatively subdued demand will continue during the first half of this year, and that demand levels may pick up in the second half of 2023, as inventory levels drop.

Analysis of the world’s main sub-regions and specialist product categories also highlights some further positive indicators, including 14 of the 23 sub-regions identified by WorldACD experiencing positive revenue growth last year compared with the overall record figures of 2021. It also reveals continued revenue growth within air cargo specialist products including temperature-controlled/pharma, dangerous goods, flowers, meat, and live animal shipments, with specialist products continuing to grow in importance and in revenue terms for carriers and the wider air freight sector.

Revenues still near record levels 

WorldACD examined chargeable weight and revenue developments across the last 15 years. Its analysis shows that worldwide air freight revenues last year were at their second-highest level in that 15-year period, just slightly below their record levels in 2021 and around twice their average annual level in the decade before the Covid pandemic. And on the demand side, tonnages in 2022 were on a par with those in 2016 and higher than in any of the years leading up to 2016.

Comparing Q1 2023 with the equivalent period in each of the last 15 years shows this year’s volumes in Q1 were comparable with those in Q1 2016. The year-on-year comparison for Q1 2023 shows a decline of 11 percent compared with 2022.

Average worldwide yields, including surcharges (in US dollars), for March 2023 are about 30 percent lower than March 2022 and around 50 percent higher than their equivalent levels in the pre-Covid year of 2019.