The global air cargo industry continues to fly high without much turbulence, seeing marked growth at the close of Q1.
For the fourth consecutive month, the International Air Transport Association (IATA) has recorded double-digit year-on-year (YoY) growth. In March, the air cargo industry logged 23.1 billion cargo tonne-kilometers (CTKs), marking a 10.3 percent increase from March 2023 and a 17.4 percent increase since February.
With that, the trade association said, traffic for Q1 2024 has eclipsed the record-high traffic the industry saw in Q1 2021.
That, said Willie Walsh, IATA’s director general, is a positive sign for the at-large industry.
“This [demand increase] contributed to a strong first-quarter performance which slightly exceeded even the exceptionally strong 2021 first quarter performance during the COVID crisis,” Walsh said in a statement.
Seasonally adjusted, the CTKs still saw increases. Month-on-month (MoM), the industry recorded a marginal 0.2 percent increase, but YoY demand has increased by 11.4 percent, the IATA said in its report.
The continued increases in demand for air cargo likely come from a number of factors. According to the report, “ongoing conflicts in the Middle East and Ukraine” are contributors, as are disruptions in the Suez and Panama Canals.
Those issues, the report said, have specifically bolstered the international CTKs of Middle Eastern and African airlines, which have the two highest annual growth rates. Airlines registered to the Middle East saw 19.9 percent annual growth, while African-registered airlines saw a 14.1 percent uptick. That’s strikingly higher than North American carriers, which, as in previous months this year, have seen the lowest annual growth.
The instability of the Red Sea, still not operating as normal after an onslaught of Houthi rebels’ attacks on cargo ships and freight providers, could also be contributing to the uptick in air transport, though IATA did not mention that tumult in its report.
But beyond geopolitical conflicts hindering supply chains, consumers’ desires could also be causing air cargo to ramp up. According to the IATA’s report, the increases have been “helped by the rapidly increasing demand for e-commerce services.”
That assertion could reference consumers’ penchant for quick-turnaround delivery on items from standard retailers, but may also encompass shipments from rising star marketplace platforms like Shein, Temu, Alibaba.com and TikTok Shop.
Research released in February by Cargo Facts Consulting estimates that the four e-commerce moguls combined ship enough to fill 108 Boeing 777 freighters each day. And the number of monthly active users (MAUs) those platforms have continues to increase.
To keep up with the demand for air cargo space—whatever the combination of causes may be—capacity has also come up in Q1 2024, nearing peak levels reached in December. Available cargo tonne-kilograms (ACTKs) hit 48.9 billion in March, which contracted by 0.1 percent MoM, but retained YoY growth of 7.6 percent.
That annual growth, the IATA said, “was almost exclusively driven by belly-hold capacity, which recorded the 35th month of consecutive double-digit growth in March.”
That belly-hold capacity increased by 20.6 YoY could spell trouble for the ocean freight industry, which has seen much more marginal capacity increases. According to the IATA, capacity for international cargo on freights increased by just 1.2 percent YoY for March.
But with this increase in both supply and demand has also come a price hike. IATA noted that, compared with February, air cargo yield—the metric it uses to represent the average cost to ship via air—has surged by 5 percent.
2021 IATA data shows that shipping by air used to cost between 13 and 15 times as much as shipping via freighter. But, as of 2021, that decreased to three to five times as much. Nonetheless, air cargo still costs brands and retailers extra cash and weighs on margins.
Though air shipment provides a ramped-up delivery timeline, either to retailers’ warehouses and stores or to the end consumer, it also has a sustainability cost, since air freight releases far more carbon emissions than ocean freight. As more and more companies start to report on their broader emissions and set goals for 2030 and beyond, that may ultimately play into shipment decisions.
But despite those considerations and the steadily increasing cost of air cargo shipment, IATA seems to expect a stable year for the industry.
“With global cross-border trade and industrial production continuing to show a moderate upward trend, 2024 is shaping up to be a solid year for air cargo,” Walsh said.
