Global air cargo unstable, airfreight volumes suppressed: DHL

According to DHL Global Forwarding’s latest Airfreight State of the Industry report, (October), currently global air cargo market is very unstable. The report found airfreight volumes as suppressed, with demand continuing to remain low on most trade lanes, although transatlantic volumes are comparatively strong. Global demand has softened since April this year and this year’s peak season is expected to see less of a surge than last year. Reduced purchasing power caused by economic lows will not help the sector, found the report, which uses data from various reliable sources including the International Monetary Fund (IMF), the International Air Transport Association (IATA), Seabury, WorldACD, IHS Markit Group and DGF Desk Research. Lower sales and high inventory levels caused by reduced export orders will also not offer the industry any succour, nor will high inflation rates around the world that are causing uncertainty now and are likely to remain in force into 2023. The ongoing war in Ukraine is of course having an impact on the airfreight sector, both in terms of cargo movements and capacity, indicates report. The report also pointed to a trend of air shipments being converted into ocean freight, with shippers likely to shift away from air cargo as ocean-going vessel schedule reliability continues to improve. Overall airfreight capacity was up by 18% in October compared to the same month of 2021, with month-on-month increases continuing (although global airfreight capacity in October was down 5% compared to the same month of 2019). The report described the greater capacity being made available as “encouraging”, but also pointed out that high jet fuel prices remain a challenge, with there having been only small signs of late of fuel prices softening.
With increasing capacity but sluggish demand for airfreight, it is no surprise that the cargo load factor is falling. Indeed, the industry-wide cargo load factor fell by 8% year-on-year in August.
Freight rates are suffering on most lanes, meanwhile. In August this year, average global rates were 6% higher than in the same month of 2021, but month-on-month declines are continuing.
DHL expects to see an aggressive spot market in operation, with fuel surcharges also likely to fluctuate as jet fuel prices rise. For the rest of this year and into 2023, DHL is predicting further COVID outbreaks potentially impacting air cargo operations, with the sector also hit by airport backlogs caused by staff shortages.