The air cargo industry should expect a strong Q4 peak season despite lower Q1 volumes as airlines respond to surging passenger demand, according to Brandon Fried, executive director, Airforwarders Association (AfA).
In a statement, AfA noted WorldACD data showing that global air cargo chargeable weight flown in Q1 2023 was down 11% year-on-year, but Fried attributes the recent lower volumes to post-Covid normalization rather than decline.
"We're coming down from the lofty volumes seen during the pandemic, which we all know were not sustainable long term, but we're not crashing, we're normalizing," Fried told The Loadstar's Big Air Cargo Debate podcast.
"We need to be bullish in the second half; consumers are still out there spending and passengers are flying," he added.
Regionally, overall tonnage in Q1 dropped by 16% for Asia Pacific and 18% for North America.
Some economists predict a fully-fledged US recession later this year, but Fried remains optimistic for the return of higher cargo volumes in line with end-of-year peak season.
He added that current freight rates are "artificially lower" than supply and demand would dictate because airlines are operating more aircraft than necessary in anticipation of an uptick — and to accommodate swathes of passengers waiting to fly.
"This will benefit freight forwarders in the long run because airlines want to tailor pricing to attract business," Fried said.
"It also indicates a departure away from the traditional freighters we saw during the pandemic, and we can expect some of the older freighters to be phased out."
The AfA executive director then urged the same fighting spirit to contend with ongoing labor shortages and union negotiations, which have been casting a shadow over US supply chains and impacting global trade flows.
"It's time for the freight forwarders to be the creative logistical problem solvers that we are — we've got to be ready for a challenging future," Fried added.
Air, ocean freight to improve in 2024
Looking ahead to 2024, Fried noted that the air and ocean freight demand are set to improve.
"We have a new baseline, and we need to stop comparing to before the pandemic," he said.
"It’'s a new world, we're seeing a new geopolitical order: the war in Ukraine, rising labor costs, Chinese manufacturers moving out of China to elsewhere in Asia, South America, Mexico."
"Manufacturers are diversifying, and we can expect to see regionalizing of supply chains in the US and globally," Fried added.
"A different political structure will have a significant impact on supply chains," he concluded.