IATA: Air cargo growth slows in January ⁠— "below expectations"

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IATA: AIR CARGO GROWTH SLOWS IN JANUARY ⁠— "BELOW EXPECTATIONS"

March 9, 2022

The International Air Transport Association (IATA) released data for global air cargo markets showing slower growth in January 2022. It said supply chain disruptions and capacity constraints, as well as a deterioration in economic conditions for the sector, dampened demand.

IATA said global demand — measured in cargo tonne-kilometers (CTKs) — was up 2.7% compared to January 2021 (3.2% for international operations).

"This was significantly lower than the 9.3% growth seen in December 2021 (11.1% for international operations)," IATA said.

"Supply chain disruptions, as well as a deterioration in economic conditions for the sector, are slowing growth," it added.

IATA noted that for the period, capacity was 11.4% above January 2021 (10.8% for international operations). It said while this is in positive territory, compared to pre-COVID-19 levels, capacity remains constrained, 8.9% below January 2019 levels.

"Supply chain disruptions resulted from flight cancellations due to labor shortages, winter weather, and to a lesser extent the deployment of 5G in the USA, as well as the zero-COVID policy in mainland China and Hong Kong," IATA said, adding that new export orders also fell during the month.

"Below expectations"

Willie Walsh, IATA's director-general, said the January results were "below expectations."

"Demand growth of 2.7% in January was below expectation, following the 9.3% recorded in December. This likely reflects a shift towards the more normal growth rate of 4.9% expected for this year," Walsh said.

"Looking ahead, however, we can expect cargo markets to be impacted by the Russia-Ukraine conflict. Sanction-related shifts in manufacturing and economic activity, rising oil prices, and geopolitical uncertainty are converging."

The IATA chief noted that capacity is expected to come under "greater pressure" and rates as a result are likely to rise.

"To what extent, however, it is still too early to predict," he added.

Russia-Ukraine Conflict

IATA said the Russia-Ukraine conflict will have a negative impact on air cargo.

It said airspace closures will stop direct connectivity to many markets connected to Russia although overall, "the impact on global markets is expected to be low as cargo carried to/from/within Russia accounted for just 0.6% of the global cargo carried by air in 2021."

IATA noted, however, that several specialized cargo carriers are registered in Russia and Ukraine, particularly those involved with heavy lift operations.

Regional performance

IATA reported that for January, Asia-Pacific airlines saw their air cargo volumes increase 4.9% in January 2022 compared to the same month in 2021 which was "significantly below" the previous month's 12.0% expansion.

Available capacity in the region was up 11.4% compared to January 2021, however, it remains heavily constrained compared to pre-COVID-19 levels, down 15.4% compared to 2019.

"The zero-COVID policy in mainland China and Hong Kong is impacting performance. Preparations for the Lunar New Year holiday may have also had an impact on volumes, but it is difficult to isolate," IATA said.

North American carriers posted a 1.2% decrease year-on-year in cargo volumes for the month which was also significantly below December's performance (7.7%).

IATA said supply chain congestion due to labor shortages, severe winter weather, and issues with the deployment of 5G as well as a rise in inflation and weaker economic conditions affected growth.

For January, European carriers saw a 7.0% increase in cargo volumes in January 2022 compared to the same month in 2021. While this was slower than the previous month (10.6%), IATA said Europe was more resilient than most other regions benefitting from robust economic activity and an easing of capacity.

Middle Eastern carriers meanwhile experienced a 4.6% decrease in cargo volumes which IATA said was the "weakest performance" of all regions and a drop in performance compared to the previous month (2.2%).

It said this was due to a deterioration in traffic on several key routes such as Middle East-Asia, and Middle East-North America.

Latin American carriers reported an increase of 11.9% in cargo volumes in January compared to the same period in 2021 — although a decline from December's 19.4%.

IATA said African airlines saw cargo volumes increase by 12.4% in January 2022 compared to January 2021 and that the region was the "strongest performer" for the period.