Global air cargo markets saw a drop in demand for March as the impacts of Covid-19 related lockdowns in Asia and the Russia-Ukraine war amid an already challenging operating environment weighed on air freight performance for the month.
The International Air Transport Association (IATA) released March 2022 data for global air cargo markets showing that cargo demand is tracking below pre-COVID-19 levels, and capacity remains constrained.
For March, IATA said global demand — measured in cargo tonne-kilometers (CTKs*) — fell 5.2% compared to March 2021 (-5.4% for international operations) and capacity was 1.2% above March 2021 (+2.6% for international operations).
IATA noted, however, that while this is in positive territory, it is a significant decline from the 11.2% year-on-year increase in February.
Meanwhile, Asia and Europe experienced the largest falls in capacity.
The trade association of the world's airlines said several factors in the operating environment should be noted including the war in Ukraine, shrinking new export orders, and slower economic growth in China.
IATA noted that the ongoing Russia-Ukraine war led to a fall in cargo capacity used to serve Europe as several airlines based in Russia and Ukraine were key cargo players. It added that sanctions against Russia led to disruptions in manufacturing and rising oil prices are having a negative economic impact, including raising costs for shipping.
It said that global goods trade has also "continued to decline" in 2022, with China's economy growing more slowly because of COVID-19 related lockdowns and supply chain disruptions amplified by the war in Ukraine.
Growing challenges ahead for air cargo
"Air cargo markets mirror global economic developments. In March, the trading environment took a turn for the worse. The combination of war in Ukraine and the spread of the Omicron variant in Asia have led to rising energy costs, exacerbated supply chain disruptions, and fed inflationary pressure. As a result, compared to a year ago, there are fewer goods being shipped including by air," said Willie Walsh, IATA's Director-General.
"Peace in Ukraine and a shift in China's COVID-19 policy would do much to ease the industry's headwinds. As neither appears likely in the short-term, we can expect growing challenges for air cargo just as passenger markets are accelerating their recovery," he added.
For the month, the trade association noted that Asia-Pacific airlines saw their air cargo volumes decrease by 5.1% compared to the same month in 2021 as available capacity in the region fell 6.4% compared to March 2021, the largest drop of all regions.
The zero-COVID policy in mainland China and Hong Kong is impacting performance, IATA said.
North American carriers also posted a 0.7% decrease in cargo volumes in March 2022 compared to a year ago. IATA said demand in the Asia-North America market "declined significantly," with seasonally-adjusted volumes falling by 9.2% in March. Capacity, however, was up 6.7% year-over-year.
Asia-Europe most impacted
IATA noted that European carriers also experienced an 11.1% decrease in cargo volumes for the said month compared to the same month in 2021 — the weakest of all regions.
The trade association noted that the "within Europe" market fell significantly, down 19.7% month on month which is attributable to the war in Ukraine.
It said labor shortages and lower manufacturing activity in Asia due to Omicron also affected demand.
Meanwhile, Middle Eastern carriers experienced a 9.7% year-on-year decrease in cargo volumes in March.
"Significant benefits from traffic being redirected to avoid flying over Russia failed to materialize. This is likely due to subdued demand overall. Capacity was up 5.3% compared to March 2021," IATA said.
Latin American carriers reported an increase of 22.1% in cargo volumes in March 2022 compared to the 2021 period.
IATA said this was the strongest performance of all regions as some of the largest airlines in the region are benefitting from the end of bankruptcy protection. Capacity in March was up 34.9% compared to the same month in 2021.
According to IATA, African airlines saw cargo volumes increase by 3.1% in March 2022 compared to March 2021 as capacity was 8.7% above March 2021 levels.
