Cargo demand has not yet hit rock bottom: experts
The good news is the slide in air cargo volumes has slowed down after falling 8 per cent last year—a necessary market rebalancing from the massive high triggered by COVID supply chain disruptions. Unfortunately, demand has not hit rock bottom yet as the soft summer season begins, and volumes are below pre-pandemic levels. Major discounting by freight forwarders with committed capacity in a weak market, plus an influx of passenger aircraft with lower-deck storage, explains the downward decline in air cargo rates as demand stabilizes 16 months into a recession, as per experts. “The market sentiment seems to be changing. More airlines and forwarders are getting nervous and accept the fact that hopes of an uptick in peak season demand later in the year are dwindling,” said Niall van de Wouw, Chief Air freight Officer, Xeneta. IATA last week projected air cargo demand will shrink 3.8 per cent and airline cargo revenues will retreat by a third to US$142.3 billion year-over-year as a surge in passenger flights ushers in more belly space and global trade slows. Cargo volumes are 5.3 per cent below 2019 levels and will tick down another two-tenths of a point, suggesting there will be little gain by year’s end, it said. Yields are expected to be nearly 29 per cent lower than last year, states IATA.