Air Cargo Demand Strengthens Despite Challenges in July

The International Air Transport Association (IATA) released data for July 2023 global air cargo markets, showing a continuing trend of recovering growth rates since February.

Middle Eastern carriers experienced a 1.5% year-on-year increase in cargo volumes in July 2023. This was also an improvement to the previous month’s performance (0.6%).

The demand on Middle East–Asia routes has been trending upward in the past two months. Capacity increased 17.1% compared to July 2022.

Meanwhile, global air cargo demand in July was tracking just 0.8% below the previous year’s levels.

Air Cargo Rates Stabilize Globally While Tonnages Fall Further

Although demand is now basically flat compared to 2022, this is an improvement on recent months’ performance that is particularly significant given declines in global trade volumes and rising concerns over China’s economy.

In July, both the manufacturing output Purchasing Managers Index or PMI (49.0) and new export orders PMI (46.4) were below the critical threshold represented by the 50 mark, indicating a decline in global manufacturing production and exports.

Global cross-border trade contracted for the third month in a row in June, decreasing 2.5% year-over-year, reflecting the cooling demand environment and challenging macroeconomic conditions.

The difference between the annual growth rates of air cargo and the global goods trade narrowed to -0.8 percentage points in June. While air cargo growth is still lagging world trade, the gap is the narrowest since January 2022.

Inflation saw a mixed picture in July, with the increase in US consumer prices picking up pace for the first time in 13 months. Meanwhile, in China, both consumer and producer prices fell, pointing to a possible deflationary economy.

Willie Walsh, IATA’s Director General said: “Compared to July 2022, demand for air cargo was basically flat. Considering we were 3.4% below 2022 levels in June, that’s a significant improvement. And it continues a trend of strengthening demand that began in February.

"How this trend will evolve in the coming months will be something to watch carefully. Many fundamental drivers of air cargo demand, such as trade volumes and export orders, remain weak or are deteriorating.

"And there are growing concerns over how China’s economy is developing. At the same time, we are seeing shorter delivery times, which is normally a sign of increasing economic activity. Amid these mixed signals, strengthening demand gives us good reason to be cautiously optimistic.” 

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