CARGOCONNECT-MAY23 - Flipbook - Page 40
F E A T U R E
AIR CARGO’S
SKEWED
OUTLOOK
BUT REGIONAL GROWTH
ABUNDANT OF NEW
FRONTIERS
Air cargo’s popularity and costs are impacted by many factors that can change at any
moment. The forecast for 2023 is filled with potential “risks” that might, however,
have a positive impact on the sector. Overall, the slow pace of global growth
and decreased demand for goods being shipped may lead to a more favorable
environment for businesses looking to ship goods via air. These geopolitical and
economic factors are expected to continue to influence air cargo through the mid
of 2023. Meanwhile, as the worlds’ next big aviation hub – India continues to bloom
and the sector being exploited to the fullest potential – with major aircraft deals
and several new airports coming up, will only determine the aviation benefits
the hub economy will offer. Although the industry and stakeholders should not
overlook the missed opportunities for more fundamental reforms while celebrating
continuity, writes SANA HUSAIN.
H
eading into May, we have not seen a
significant bounce back in air freight
volumes post Chinese New Year. For
now, capacity in most markets is still
available, although the US market
seems to have picked up faster than
Europe. In China, with BA and Virgin
Atlantic declaring intent to return
to the Shanghai – UK route in the
coming months, we are seeing more
plans to increase the overall number of passenger flights. In the
meantime, the carriers are doing their best to stabilise rate levels.
Whilst the UK does appear to have narrowly avoided a recession
so far, the economic outlook here and globally is still uncertain.
Despite no clear returns of a strong demand, and conflicting
industry views, carriers remain buoyant on the outlook for the
full year and offering long term rates reflecting this confidence.
Looking ahead, IATA has predicted a 4.3 per cent decline
in air cargo volumes this year to 57.7m tonnes and yields are
expected to decline by around 22 per cent. Predictions for a small
uptick in the second half of 2023 seem to form the consensus of
opinion amongst numerous sources.
The geopolitical and economic factors are still making a
noticeable impact on the air freight market, with global consumer
demand being reflective of the turbulent financial situation.
This is mirrored in the global freight volumes, which according
to the recent data from Seabury and WorldACD, were 16.6 per
40 | CARGOCONNECT MAY 2023
cent lower in January 2023, than in January 2022. However,
the market trend is beginning to move upwards again, and the
capacities are increasing.
The cargo capacity, measured by available cargo tonnekilometres (ACTKs) – increased 3.9 per cent YoY in January
2023, thus reflecting the strong recovery of belly cargo capacity
in the passenger airline markets. The cargo load factors stood
at 44.8 per cent. This was the first YoY growth in capacity since
October 2022. The outlook for the air cargo industry in 2023 is
expected to be challenging. Multiple macro-economic headwinds
stemming from the global pandemic persist, and the ongoing war
in Ukraine has disrupted important trade flows, and economic
activity across various regions.
“Air cargo has always been a barometer of world trade,”
says Wilson Kwong, Chief Executive, Hong Kong Air Cargo
Terminals Ltd (Hactl). “When the global economy is fit and
well, the demand for luxury goods is buoyant and airfreight
provides the means of distribution. The Ukraine crisis has caused
escalation in energy prices which has caused inflation, and that
is dampening the consumer demand in some markets. But, the
wholesale energy markets are moving down again, and inflation
will gradually subside.”
With economic and trade growth expected to outperform in
the near term, there are opportunities for growth – driven by
imports and exports of intermediate and manufactured goods
as well as the e-commerce traffic. India could also benefit from
a US and European pivot, away from China, but that depends on