Air cargo volume slumps as war and economic woes blight world trade

As the looming row over Russia’s decision to seize hundreds of aircraft left grounded in the country, new figures show that the war in Ukraine has badly dented the global air cargo market.

The International Air Transport Association (IATA) has released its data for global air cargo markets in March, which found a significant drop in demand. The association said the effects of Omicron in Asia, the Russia – Ukraine war and a challenging operating backdrop all contributed to the decline.

However the organisation also revealed that passenger levels continued to rebound strongly with its director general calling for urgent action to make it easier for passengers to access aviation.

“Cargo demand is tracking below pre-COVID-19 levels, and capacity remains constrained,” warned IATA.

The data showed global demand, measured in cargo tonne-kilometres (CTKs), fell 5.2% compared to March 2021, with the fall in international operations reaching -5.4%. Capacity was 1.2% above March 2021 (+2.6% for international operations).

“While this is in positive territory, it is a significant decline from the 11.2% year-on-year increase in February. Asia and Europe experienced the largest falls in capacity,” added IATA.

The association said several factors in the operating environment were current drivers of the downward trends in business levels.

​“The war in Ukraine led to a fall in cargo capacity used to serve Europe as several airlines based in Russia and Ukraine were key cargo players,” it added. “Sanctions against Russia led to disruptions in manufacturing. And rising oil prices are having a negative economic impact, including raising costs for shipping.

“New export orders, a leading indicator of cargo demand, are now shrinking in all markets except the US. The Purchasing Managers’ Index (PMI) indicator tracking global new export orders fell to 48.2 in March. This was the lowest since July 2020.”
It added: “Global goods trade has continued to decline in 2022, with China’s economy growing more slowly because of COVID-19 related lockdowns, among other factors; and supply chain disruptions amplified by the war in Ukraine. General consumer price inflation for the G7 countries was at 6.3% year-on-year in February 2022, the highest since 1982.”

Willie Walsh, IATA’s director general warned there seems little likelihood of the market picking in the short to medium term as the key drivers of the slump look unlikely to be solved.

“Air cargo markets mirror global economic developments. In March, the trading environment took a turn for the worse,” he said. “The combination of war in Ukraine and the spread of the Omicron variant in Asia have led to rising energy costs, exacerbated supply chain disruptions, and fed inflationary pressure. As a result, compared to a year ago, there are fewer goods being shipped—including by air. Peace in Ukraine and a shift in China’s COVID-19 policy would do much to ease the industry’s headwinds. As neither appears likely in the short-term, we can expect growing challenges for air cargo just as passenger markets are accelerating their recovery.”

It was a different story for passenger numbers with IATA reporting total traffic in March 2022, measured in revenue passenger kilometres or RPKs, was up 76.0% compared to March 2021. Although that was lower than the 115.9% rise in February year-over-year demand, volumes in March were the closest to 2019 pre-pandemic levels, at 41% lower.

Walsh said while the passenger numbers were positive airport operators needed to increase staffing levels.

“With barriers to travel coming down in most places, we are seeing the long-expected surge in pent-up demand finally being realised,” he explained. “Unfortunately, we are also seeing long delays at many airports with insufficient resources to handle the growing numbers. This must be addressed urgently to avoid frustrating consumer enthusiasm for air travel.”

“The combination of war in Ukraine and the spread of the Omicron variant in Asia have led to rising energy costs, exacerbated supply chain disruptions, and fed inflationary pressure. As a result, compared to a year ago, there are fewer goods being shipped—including by air.’’

Willie Walsh, IATA

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