Air cargo demand drop again
By Jennifer Chang. Photo：Pixabay
According to the latest data from data provider CLIVE, air cargo demand in August fell by 5% from a year earlier, compared with an 8% decline in June and a 9% decline in July. Economic turmoil is hitting air freight rates and demand around the world. It is about to enter the traditional peak season of air freight in the fourth quarter. Due to high inflation suppressing consumption, the excess inventory at the import side still needs to be digested. At this stage, the transparency is not high and the market is not clear. The main reason is that the excess inventory has yet to be digested by the market. Even if there is cross-border e-commerce cargo support, the effect is still limited, and the peak season for air freight in the fourth quarter of this year may be over. The reduction in transportation demand has led to a downward trend in freight rates.
Air freight rates have been falling and economic indicators have been dismal since March. Foreign media reported that China, the largest engine of global trade, grew by only 0.4% in the second quarter. Lockdowns are still in place in several cities. Chinese investment in the Belt and Road Initiative is slowing and China is facing a debt crisis triggered by a crucial property market. Europe, on the other hand, is struggling as several Russian and Ukrainian airlines are major cargo players. The Ukrainian war continues to erode the cargo capacity used to serve Europe. That forced the EU to cut its growth forecast for 2023 to 1.5% from 2.3% previously. The Bank of England predicts that the UK economy will fall into recession in the fourth quarter of this year. The U.S. economy shrank 0.9% in the second quarter after contracting 1.6% in the first three months of the year. After a 5.9% drop in containerized imports in June, the National Retail Federation now expects U.S. imports to fall 1.5% in the second half of the year, worsening further in 2023. Several recent studies suggest that global supply chain disruptions will continue until 2023.
The air cargo market remains chaotic and unpredictable, with personnel shortages, the war in Ukraine, natural disasters, record U.S. inventories, inflation and the Covid lockdown in China, all of which are likely to bring more volatility to the air cargo market for the rest of the year . The airline association said new export orders, a leading indicator of demand for goods, fell in all markets except China, which started to rise in June. In addition, further easing of Covid-19 restrictions in China will further boost the recovery in the coming months. While ocean shipping will be the main beneficiary, air cargo will get a boost.
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