Air cargo growth continues in January but at a slower pace: IATA
The International Air Transport Association (IATA) released data on global air cargo markets showing slower growth in January 2022. Supply chain disruptions and capacity constraints, as well as a deterioration in economic conditions in the sector dampened demand.
Global demand, measured in freight tonne-kilometres (CTK*), is up 2.7% compared to January 2021 (3.2% for international operations). This figure is significantly lower than the 9.3% growth observed in December 2021 (11.1% for international operations).
Capacity was 11.4% higher than January 2021 (10.8% for international operations). Although this is in positive territory, compared to pre-COVID-19 levels, capacity remains constrained, 8.9% below January 2019 levels.
Disruptions in the supply chain as well as deteriorating economic conditions in 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 rollout of 5G in the United States, as well as political zero COVID in mainland China and Hong Kong.
- The Purchasing Managers’ Index (PMI) indicator that tracks new global export orders fell below 50 in January for the first time since August 2020, indicating that most companies surveyed have reported a drop in new export orders.
- The global Purchasing Managers Index (PMI) for January lead time vendors was 37.8. While values below 50 are normally favorable for airfreight, under current conditions this indicates longer delivery times due to supply bottlenecks.
- The inventory-to-sales ratio remains low. This is positive for airfreight as it means manufacturers can turn to airfreight to meet demand quickly.
“Demand growth of 2.7% in January was below expectations, after the 9.3% recorded in December. This likely reflects a shift towards the more normal growth rate of 4.9% expected for this year. In the future, however, we can expect freight markets to be affected by the Russian-Ukrainian conflict.
“Sanction-related changes in manufacturing and economic activity, rising oil prices and geopolitical uncertainty are converging. Capacity is expected to come under greater pressure and rates are expected to rise. To what extent, however, is still too early to predict,” said IATA Director General Willie Walsh.
The Russian-Ukrainian conflict will have a negative impact on air freight. The airspace closures will end direct connectivity with many markets connected to Russia. Overall, the impact on global markets is expected to be small, as freight transported to/from/within Russia accounted for only 0.6% of global freight transported by air in 2021. Several carriers specialized cargo are registered in Russia and Ukraine, especially those involved. with heavy lifting operations.
Middle Eastern carriers experienced a 4.6% decline in freight volumes in January 2022. This was the weakest performance of any region and a drop in performance from the previous month ( 2.2%).
This was due to deteriorating traffic on several key routes such as Middle East-Asia and Middle East-North America. Capacity increased by 6.2% compared to January 2021, but remains limited compared to pre-COVID-19 levels, down 11.8% compared to the same month in 2019.