Insights into Airfreight Trends and Challenges

Insights into Airfreight Trends and Challenges

The aviation sector gears up for a resurgence in profitability in 2023, buoyed by a surge in travel demand and direct bookings via airline websites. Following a collective loss of $9.7 billion in 2022, the industry anticipates widespread profitability this year. Willie Walsh of the International Air Transport Association (IATA) exudes confidence, foreseeing a return to, or even surpassing, pre-pandemic traffic levels across most markets by 2023.

Simultaneously, the airfreight domain witnesses notable trends:

1. Economic Indicators: Despite downturns in 2022, air cargo traffic displays resilience, with indicators of recovery and demand nearing pre-pandemic levels. July 2022 reported a 9.7% year-over-year decline, remaining 3.5% below the 2019 benchmark.
2. Fuel Costs Impact: Elevated fuel prices may sustain increased airfreight rates, influencing industry dynamics. The revival of air cargo capacity encounters hurdles, notably in Asia-Europe routes due to factors like the Russia-Ukraine conflict.
3. Optimistic Outlook: Airfreight forwarders express optimism, projecting airfreight to contribute nearly a quarter (25%) of airline revenue by the close of 2023. However, prevailing global and macroeconomic challenges could sway the industry’s trajectory.

Looking ahead, crucial trends to monitor include:

• Capacity Constraints: A rebounding air cargo market could trigger space shortages and heightened constraints, compounded by the absence of Russian-owned aircraft due to embargoes.
• Sustained Demand: Despite being a smaller player in the cargo market, the airfreight sector faces sustained demand for new planes and capacity. Disruptions in supply chains, travel restrictions, and amplified consumer spending have elevated the significance of air freight.
• E-commerce Boost: The burgeoning e-commerce landscape continues to drive demand for airfreight capacity as consumers increasingly favour online shopping. The e-commerce segment within air cargo is anticipated to maintain its upward trajectory.

“Most markets are anticipated to return to or exceed pre-pandemic traffic levels in 2023.” – Willie Walsh, International Air Transport Association (IATA)