Air cargo market to rebound slightly in 2024

The airfreight market can expect modest growth in 2024 and may even see a slight upturn in the second half of 2023, according to industry experts. Still, rising passenger demand and capacity are having a negative impact on airfreight, Glyn Hughes , the director general of TIACA , said in a webinar hosted Monday by Scan Global Logistics . And Lars Jensen , chief executive of Vespucci Maritime , said in the webinar that he remains optimistic on the outlook for air and sea freight, and that he believes the market has returned to normal from the pandemic. “We should no longer use … the pandemic as an excuse,” Jensen said. “But when there are hiccups in the market, and there definitely are … it’s normal. The normal state of affairs in this industry is not stability.” Even with instability, Hughes and Jensen predict a positive 2024 for the air and sea freight markets. “Both of you are coming along with a positive outlook, at least for 2024, and a little bit more of a, let’s say, relaxed positive outlook for the remainder of 2023,” David Wystrach , global head of airfreight at Scan Global, said in the webinar. “I think this is a good signal and good takeaway, especially nowadays where everybody is a little bit nervous about the overall market environment.” ‘Revenge travel’ increases capacity, decreases demand Growing inflation and interest are leading to increased housing, food and other costs, which is curtailing discretionary spending for most people. “This, of course, means that things such as smartphone sales are down, television sales are down, some fashion items are down, jewelry items are down — and these are items which are typically in the higher-value sector for [transport by] air,” Hughes said. “The forecast going forward, according to the OECD [ Organisation for Economic Co-operation and Development ], is that the downward trajectory of inflation will continue throughout this year and should stabilize into 2024 but stabilize still at higher levels than we saw during COVID.” Despite consumers purchasing fewer high-value goods, they are buying airline tickets, a move Hughes called “revenge travel” — a move consumers make to reconnect with loved ones they could not see during the pandemic and in response to the general inability to travel during that time. “The industry has seen an incredibly strong, buoyant recovery in ticket sales,” Hughes said. “This is what we’re calling ‘revenge travel,’ which is travel that they are going on, despite the fact they find themselves in difficult financial situations.” Revenge travel leaves even less money for discretionary spending on items typically moved by air, he said. The increase in passenger flights has increased bellyhold cargo capacity . “A lot of aircraft that were previously designated as ‘ preighters ’ have actually been returned to passenger service,” Hughes said. “The summer schedule on the passenger side has probably been the most significant since pre-COVID times, which is adding a significant amount of capacity back into the marketplace. [caption id="attachment_57136876" align="alignnone" width="696"] (Graphic/Glyn Hughes)[/caption] “When we have a situation of softening demand and increased capacity, it has, of course, a negative impact on yields,” Hughes said, adding that he expects this trend to continue through year’s end. “One note of brightness is the fact that, even though the yields have softened since their peak, as it were, in 2021, they’re still higher than they were in 2019. So the question really comes at some point, ‘Will they start to return [to] an upward trajectory?’ And we’re very much forecasting that that will be true in 2024.” [caption id="attachment_57136877" align="alignnone" width="622"] (Graphic/Glyn Hughes)[/caption] Efforts to grow trade in Africa Hughes highlighted that e-commerce is booming and he expects that to continue. This market also benefits developing nations, such as India and those in Africa , as many of these countries are online sellers, he said. “Africa is very interesting in the sense that it’s got 15% of the global population, 22% global landmass, somewhere in the region of about 30% of the number of individual sovereign states, and yet accounts for 2% of global activity in terms of trade,” he said. Hughes highlighted two initiatives currently underway: The Single African Air Transport Market, an African Union initiative, is working to create a single airspace regime for the continent. The African Continental Free Trade Area Agreement is seeking to support and grow intra-Africa trade and, ultimately, international trade. “With all due respect to these programs, I believe much more needs to be done at a much faster timeframe,” Hughes said. Nevertheless, Jensen does not believe Africa will improve its standing in the market. “I am not an optimist in terms of a resurgence of Africa,” Jensen said. “There’s still too much corruption, strife, warfare, inefficiencies. I don’t see that as a major growth area.” Join Air Cargo Next for the second Air Cargo Tech Summit on Monday, Sept. 18, and Tuesday, Sept. 19, at the Brussels Marriott Hotel Grand Place in Belgium. For more information on the summit and to register, click here .

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