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Global economic conditions continue to restrain air freight

by Christian SivièreJuly 13, 2023


Against a backdrop of ongoing supply chain challenges caused by the Russian invasion of Ukraine, the tightening of global financial conditions, high interest rates, inflation and the resulting slowdown of economic growth, air cargo continues to encounter headwinds.

Christian Sivière runs Solimpex and is an international trade consultant and lecturer. christian.siviere@videotron.ca


In line with weakening global trade, the Purchasing Manager’s Index (PMI), published by S&P Global and measuring new export orders, has remained below the critical line for the last twelve months. The PMI for supplier delivery time and other indexes indicate persisting high inventory levels, and this tends to have a negative impact on air cargo growth. Overall global goods trade declined by 2.6 percent in February, following a one percent decline in January.


Let’s see what the figures say regarding air cargo. The Montreal-headquartered International Air Transport Association’s (IATA) statistics for March show a continuous decline of air cargo performance compared to a year ago. Global air cargo demand measured in cargo tonne-kilometers (CTKs) fell 7.7 percent compared to March 2022. But slightly improved over February’s performance, which stood 9.4 percent below last year’s, and half the decline seen in January and December (down 16.8 percent and 15.6 percent, respectively).


The trend began in early 2022 and continues this year. This brings the March performance 8.1 percent below pre-Covid levels.


Capacity, meantime, was up 9.9 percent, reflecting the addition of belly freight capacity, ahead of the spring/summer travel season, as the passenger side of the airline business continues to recover.

Regional performance

Asia-Pacific airlines saw their air cargo volumes decrease by 7.3 percent in March compared to the same month of 2022, while available capacity was up 23.6 percent. North American carriers posted the weakest performance of all regions, with a 9.4 percent decrease in volume against a modest 0.4 percent capacity increase.


European carriers saw their cargo volumes decrease by 7.8 percent against an 8.8 percent capacity increase. Middle Eastern airlines experienced a 5.5 percent decrease while capacity increased 9.7 percent. Latin American carriers reported a 5.3 percent decrease in cargo volumes, while capacity was up 12.9 percent. African airlines saw cargo volumes go down 6.2 percent in March.

Mixed outlook

The outlook for air cargo this year remains mixed, to say the least. IATA economist Bojun Wang, speaking at the World Cargo Symposium at the end of April, predicted that air cargo would decline by four percent this year, compared with 2022 levels, reflecting the ongoing challenging economic environment.


The International Monetary Fund recently downgraded its global GDP growth outlook for the year to 2.8 percent from the previous forecast of 2.9 percent. This figure lags behind the 3.4 percent growth recorded in 2022.


According to Wang, cargo yields, the average rate paid by customers to transport one ton of freight on one cargo revenue kilometre, an indirect but polite way to refer to rates, are expected to decline by around 23 percent this year, following a seven percent increase last year, a 24 percent increase in 2021 and a 50 percent increase in 2020.


In a nutshell, air cargo rates are slowly returning to more normal levels, although they are not there yet. Another interesting development is the increase in supply driven by the return of passenger flights with the corresponding, added belly capacity. Before the pandemic, passenger flights carried around 50 percent of all air cargo and this dropped to 26 percent in 2022 but belly freight now accounts for about 40 percent of total air cargo.


What’s new at home

Following this deluge of statistics and percentages, what is happening closer to home with our Canadian airlines? Continuing its expansion into the air cargo business, Air Canada Cargo began a freighter service from Toronto to Liege, Belgium, in March and to Mulhouse/Basel in April. These followed the recent start of service to Dallas, Atlanta and Bogota. In early May, Air Canada Cargo received two more factory-built Boeing 767 freighters in Toronto, joining its growing freighter fleet.


Cargojet, which operates an extensive air cargo network in Canada for express and e-commerce deliveries, had to take steps to cut costs and preserve cash due to weaker domestic cargo demand. It unloaded a third second-hand Boeing 777-300 intended for conversion into a main-deck freighter and plans to finalized the sale of three of its current 777s.


As we’re getting close to mid-year and with the Russian invasion of Ukraine continuing, given the regrettable but tacit support or neutrality of important countries, like China, India, South Africa and even Brazil, it is hard to imagine a return to growth and stability any time soon.

What’s worse is that this tragedy prevents the world from uniting to work together to fight climate change. Collectively, airlines are committed to net-zero carbon emissions by 2050. There are costs involved, but the climate crisis is real and we have seen early signs of it already this year with fires in Alberta and floods in British Colombia this spring. Only a peaceful world will be able to tackle climate change.

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