Air transport could boost demand for trade and e-commerce

Growth in trade, a boom in e-commerce and shipping capacity constraints led to increased global air freight demand in May 2024, according to data from the International Air Transport Association (IATA).

Total demand, measured in freight tonne-kilometres, increased by 14.7 per cent compared to May 2023 levels (15.5 per cent for international operations), marking the sixth consecutive month of double-digit year-on-year growth.

Capacity, measured in available cargo tonne-kilometres (ACTK), increased by 6.7 per cent compared to May 2023 (10.2 per cent for international operations).

“Air freight demand rose sharply in May across all regions, with the sector benefiting from increased trade, booming e-commerce and capacity constraints in shipping. The outlook remains broadly positive, with purchasing managers showing expectations for future growth.

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“However, some softening could occur as the U.S. imposes tougher conditions on e-commerce shipments from China. Increased costs and transit times for shipments under $800 could put off U.S. consumers and pose a significant challenge to growth in the Asia-North America trade lane, the world’s largest,” said IATA Director General Willie Walsh.

There are several factors to pay attention to in the operating environment:

The Purchasing Managers’ Index (PMI) for global industrial production and new export orders increased in May (52.6 and 50.4, respectively).

Industrial production and global cross-border trade rose in April month-on-month (by 0.5% and 1.5%, respectively).

Inflation in May presented a mixed picture. In the EU and Japan, inflation rates fell to 2.7% and 2.8% respectively, while in the US they rose to 3.3%. By contrast, China’s inflation rate remained close to zero (0.3%), reflecting weak domestic demand due to high unemployment, sluggish income growth and a housing crisis, a trend that is set to continue into 2023.

African airlines saw an 18.4 percent year-on-year increase in air cargo demand in May, the strongest of all regions. Demand in the Africa-Asia market increased by 40.6 percent compared to May 2023, the strongest of all trade lanes. Capacity increased by 21.4 percent year-on-year in May.

European carriers reported a 17.2 percent year-on-year increase in air cargo demand in May. Intra-European air cargo volumes increased by 25.6 percent compared to May 2023, the fifth consecutive month of double-digit annual growth. Europe-Middle East routes saw demand increase by 33.8 percent. Capacity increased by 11.9 percent year-on-year in May.

Middle Eastern carriers reported a 15.3 percent year-on-year increase in air cargo demand in May. As mentioned above, the Middle East–Europe market performed particularly well, achieving a 33.8 percent year-on-year increase, outpacing the Middle East–Asia market, which grew by 18.6 percent year-on-year. Capacity increased by 2.7 percent year-on-year in May.