Airfreight industry watches for signs of midyear recovery

Air cargo ended 2022 on a weak streak that is expected to continue well into the first half of the year, with logistics companies hanging hopes for better demand on retail inventory clearance bottoming out by summer. 

Uncertainty is the watchword for 2023. Any progress in freight transport could be undone by a recession predicted by most economists or more unexpected geopolitical events.

Overall shipment volumes were down 8% in December versus the same period the prior year. More importantly, because 2021 was such an unusually strong year for comparison purposes due to pandemic-led distortions, demand was 13% below the pre-COVID period, said freight benchmarking firm Xeneta in its latest report.

It was the 10th consecutive month that the amount of goods moved by air declined, as the Ukraine war, high inflation, COVID isolation mandates in China, excessive inventory buildups and improved ocean shipping reliability reduced consumer purchases and the need for companies to ship via air. Global export orders — a leading indicator for air cargo procurement — continue to decelerate, according to the Purchasing Managers Index.

Lagging data from the International Air Transport Association, which uses a different distance-based methodology and only data from airline members, validates the negative trend line for air cargo. The airline group this week reported cargo traffic fell 13.7% in November, nearly six points more than Xeneta previously said.

Both shippers and carriers can claim victory from the market normalization underway: Spot market shipping prices are down 30% to 35% from the pandemic peak but still 75% more than pre-COVID levels, according to market reporting agencies.