An Abundance of Supply in The Air


The Latest data from the International Air Transport Association (IATA) shows that capacity in the form of Available Cargo Tonne Kilometres remains up on 2021 levels whilst the volume demanded represented by Cargo Tonne kilometer (CTK) has been below 2021 levels for 8 consecutive months. 

Monthly capacity in the global air freight market was up on average 5.2% year-on-year from January 2022 to December 2022 and was up year-on-year in 10 of the 11 reported months of 2022. Meanwhile, the volume of air Freight demanded dropped year-on-year during 8 of the 11 reported months in 2022. 

The effect of the above is a surplus supply that has facilitated lower air freight rates. Demand has been pushed down by record-low consumer confidence around the world in response to high inflation in the necessity areas of food and energy, this has reduced consumer spending on non-essential ecommerce goods that demand air freight to meet the fast paced expectations of next day and premium delivery services. Volumes in the ecommerce market were in decline during 2022 as the pandemic volume boost didn’t hold into 2022, whilst consumer confidence is set to improve as severe recession fears recede higher prices will continue to deter the extravagant ecommerce spending we saw during the pandemic. 

The strong growth seen in ACTK represents high levels of supply in the air freight market from normalisation in the passenger market combined with the the fruits of investment in to global air freight fleets. According to OAG a consultancy available seats ended the year near 4.7bn worldwide 12% below but 30% higher than in 2021. With Belly freight providing around 30% of capacity in the Air Freight market this significantly increased available volumes. 

High rates and low belly freight supply encouraged investment into new cargo planes over the previous 2 years, it’s now reported there are more All Cargo planes in the world’s skies than ever before, more than 340 main deck freighters have entered service since the start of the pandemic increasing supply by more than 18%. 

Ti have researched the the direction air Freight market in the our latest Q1 2023 air freight tracker looking at evidence from rates, volumes, demand indicators and capacity information to create a an outlook for the coming 12 months.