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The air cargo industry is always subject to a multitude of influences, and the current downturn in demand is a logical consequence of what is affecting consumers globally. High inflation, high interest rates, high energy costs and concern over job security have compounded to create an air of defensive consumer spending.
While these economic factors are contributing to a downturn in demand, shippers are also returning to ocean transport, as this industry market landscape continues to improve. The reduced demand has allowed air shippers to benefit from softening rates, a trend that is expected to continue in 2023.
Despite this downturn in demand for air cargo the industry is structurally in a good place, with quality performance in moving perishables, high tech, pharmaceutical and, of course, ecommerce commodities. At the same time, we expect further capacity increases, as freighter conversions and production deliveries look very buoyant for the next few years. We can also see the continuing return of passenger operations bringing further belly capacity back to the market. In fact, at the present time air cargo capacity has recovered to over 90% of the 2019 (pre-COVID) levels.
Speed continues to be the main advantage of shipping by air, followed by meeting customer requirements and reliability. While many industry experts are not expecting demand to increase quickly in 2023, the overall state of the industry is very strong. Therefore, despite the downturn in demand, there is some optimism for the coming year, which is good news for everyone.
For more information, contact David Lychek, Director – Ocean & Air Services.
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