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Air cargo’s busy season looking more like molehill than mountain peak

The air cargo industry is experiencing a downward trend in rates due to extreme discounting by freight forwarders and an influx of passenger aircraft offering lower-deck storage. The decline in air cargo volume has slowed after an 8% fall last year, but demand hasn't hit bottom yet and remains below pre-pandemic levels.


Source: https://www.freightwaves.com/


The International Air Transport Association (IATA) projects a 3.8% shrink in air cargo demand and a 33% decrease in airline cargo revenues year over year. Despite this, cargo revenues will remain higher than pre-pandemic levels due to labor shortages and fuel expenses. Air cargo rates continue to decrease, reaching levels 48% lower than a year ago.


The combination of rising supply and low demand has pushed rates closer to 2019 levels. The utilization of cargo jets has declined, with cargo jet utilization falling 5.3% year over year in May. Many shippers are interested in updating their contracts or buying space on the spot market to take advantage of lower rates, leading to overall rate drops.

Air logistics companies are optimistic that the market will improve by the start of the fourth quarter, anticipating a better peak season than last year. However, the recovery in consumer demand and inventory levels has been slower than expected, which may impact the need for international air and ocean shipping.


Overall, the air cargo industry is facing challenges in terms of rates, demand, and inventory levels. While there are hopes for a better peak season, the current economic conditions and consumer behavior are creating uncertainties.



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