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Air cargo still weak, but with some "bright spots for airlines to focus on"


The air cargo market continues to look weak – but economists, forwarders and airlines are confident it won’t – at least – get much worse.


WorldACD said yesterday tonnage and rates fell again in week 22, up to 4 June, with volumes down 4% week on week and rates down 1%.


“Average pricing decreased slightly, on a two-week on two-week basis, from all of the main origin regions, with rates outbound Europe to Asia Pacific showing the most notable change (-4%),” it said.


Chargeable weight in the two-week period, year on year, was down 8% – with ex-North America down 18%, ex-Europe down 9%, and ex-Asia Pacific down 6%. Traffic ex-Middle East & South Asia is up 6%, YoY, however, with capacity up 11% overall and up 29% in Asia Pacific.


Flexport, which has three 747 freighters operated by Atlas Air, agreed the market was “not great”.


“The industry was hoping for a second-half business rebound. I don’t think we’ll get it,” explained Neel Jones Shah, EVP and head of global air freight for the forwarder.


“But the global economy is in better shape than was thought,” he added, “and, overall, the health of the US economy is quite good.”


He was bullish on medium-term demand, and said: “I think we will see an acceleration of demand in 2024, and more normalisation. 2023 looks a lot like 2019, but yields are still high, although jet fuel is also high, as are pilot costs.


“In fact, there are much higher input costs, which airlines can’t absorb alone, so they need high revenues.”


But he noted: “Many tradelanes now are seeing yields below 2019 levels. The amount of capacity on the transatlantic right now is crazy, and parts of South-east Asia are seeing passengers flood back.”


He added that China was still “behind the curve” on passenger traffic, as was Hong Kong.


Tom Owen, director cargo for Cathay Cargo, told delegates at the CNS Partnership conference in Miami this week that the carrier’s capacity was still at just 20% of pre-Covid levels, but would be back to 85% by the end of the year.


“We are very much still rebuilding,” he said.


According to IATA’s economist, Paulos Lakew, there were some bright spots for airlines to focus on. He told CNS: “Headline inflation has likely peaked. But core inflation is still at its peak in Europe, although it is expected to pull back to 7%. The concern is that inflation is becoming ‘sticky’.


“But the price of crude has been trending downwards since June last year. And another bright spot is the labour market.”


The US unemployment rate has declined, and reached a level seen only twice since the 1970s, he said. “It’s a tight labour market which helps the economy.


“And cargo revenues are still some 40% higher than they were in 2019,” he added. “But airline revenues are now being driven by passengers again.”


Worldwide average rates are currently 38% below their levels this time last year, at an average of $2.43 per kg in week 22, said WorldACD.



By Alex Lennane

Source: theloadstarcom

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