Barcelona, December 19, 2023.- Despite the pessimistic economic outlook on some continents, air cargo seems to grow next year:
IATA is expecting air cargo demand to increase by 4.5% next year while pressure on rates is expected to bring down revenues for the sector. The airline association said the projection of a cargo tonne km increase next year comes on the back of the International Monetary Fund’s prediction of a 3.5% increase in trade and follows an estimated fall of 3.8% in airfreight demand this year.
Looking at regional performance, African carriers are expected to post a 1.5% increase in cargo demand next year, Asia Pacific 3.6%, Europe 4.1%, Latin America 7.7%, Middle East 12.3% and North America 2.1%.
Asked why air cargo demand was expected to increase faster than trade, IATA senior macro economist Rachel Yuting Fan explained: “The growth rate is based on a low base. Air cargo has been decreasing for the last two years, especially this year when it declined by 3.8%, so the growth for next year is based on that.
She added: “Our assumptions include GDP, inflation, interest rates, the strength of the US dollar, unemployment, jet fuel prices, the pace of recovery in China and conflicts. At the moment our baseline assumption is for war not to spread and for China to have a slow recovery.” Meanwhile, IATA is expecting cargo revenues to fall by 17.3% year on year in 2024 to $111.4bn.
The revenue decline is based on yields continuing to fall next year by 20.9%, driven by the continued growth of belly capacity related to strong growth on the passenger side of the business and trade stagnation.
However, yields will remain high by historical standards, IATA said. The association pointed out that “yield progression has been extraordinary” in these last years (-8.2% in 2019, +54.7% in 2020, +25.9% in 2021, +7% in 2022, -32.2% in 2023).
However, Fan pointed out that cargo revenues are still expected to be around 11% higher than they were in the pre-pandemic year of 2019. This year cargo revenues are expected to be 34.8% lower than 2022 at $134.7bn.
Fan said this year’s revenue decline is driven by weaker demand and lower yields. The industry has also been affected by improved ocean shipping reliability and returning belly capacity.
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