THE air cargo market has experienced a moderate uptick in demand since August, providing some relief, but the anticipated seasonal boost in retail shipments for the holidays is projected to be only a third of the usual level, reports New York's FreightWaves.
Many industry stakeholders are now adjusting their expectations, suggesting that a genuine recovery may not materialise until the fall of 2024 or later.
Xeneta, a market intelligence provider, reports a two per cent increase in air freight volumes in October compared to September and a two per cent year-on-year growth.
However, this sequential growth falls short compared to the robust peak seasons observed in the previous five years.
As of mid-November, air cargo traffic is only marginally ahead of last year's lackluster fourth quarter, according to various surveys.
Several factors contribute to the subdued air cargo market, including stagnant consumer purchasing power due to inflation, a cooling macroeconomic environment exacerbated by geopolitical conflicts, shifting consumer spending toward services and experiences, limited indications of significant retail restocking, and a preference for low-cost ocean shipping.
Consequently, the consensus in the freight sector is that a substantial recovery in air shipping is unlikely for at least the next nine to 12 months.
While air freight volumes and rates have stabilised after the double-digit declines earlier in the year, the annualised drop in cargo revenues during the third quarter underscores the challenges airlines and logistics providers face.
Major US and European airlines, such as Air Canada, United Airlines, Air France-KLM, and Lufthansa, reported cargo revenue declines ranging from 25 per cent to 40 per cent for the three-month period.
Lufthansa Cargo's freighter unit barely broke even, and Korean Air's cargo revenue fell 51 per cent.
Logistics giants Kuehne + Nagel and DSV also experienced significant drops in revenue for arranging air cargo moves, with declines of 46 per cent and 14 per cent year on year, respectively.
'Most management teams to date have been tempering expectations for a better-than-expected peak season and pushing out the timeline for freight recovery. Over the past several weeks, equities markets have largely reflected that sentiment,' said Stifel analyst Bruce Chan.
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Many industry stakeholders are now adjusting their expectations, suggesting that a genuine recovery may not materialise until the fall of 2024 or later.
Xeneta, a market intelligence provider, reports a two per cent increase in air freight volumes in October compared to September and a two per cent year-on-year growth.
However, this sequential growth falls short compared to the robust peak seasons observed in the previous five years.
As of mid-November, air cargo traffic is only marginally ahead of last year's lackluster fourth quarter, according to various surveys.
Several factors contribute to the subdued air cargo market, including stagnant consumer purchasing power due to inflation, a cooling macroeconomic environment exacerbated by geopolitical conflicts, shifting consumer spending toward services and experiences, limited indications of significant retail restocking, and a preference for low-cost ocean shipping.
Consequently, the consensus in the freight sector is that a substantial recovery in air shipping is unlikely for at least the next nine to 12 months.
While air freight volumes and rates have stabilised after the double-digit declines earlier in the year, the annualised drop in cargo revenues during the third quarter underscores the challenges airlines and logistics providers face.
Major US and European airlines, such as Air Canada, United Airlines, Air France-KLM, and Lufthansa, reported cargo revenue declines ranging from 25 per cent to 40 per cent for the three-month period.
Lufthansa Cargo's freighter unit barely broke even, and Korean Air's cargo revenue fell 51 per cent.
Logistics giants Kuehne + Nagel and DSV also experienced significant drops in revenue for arranging air cargo moves, with declines of 46 per cent and 14 per cent year on year, respectively.
'Most management teams to date have been tempering expectations for a better-than-expected peak season and pushing out the timeline for freight recovery. Over the past several weeks, equities markets have largely reflected that sentiment,' said Stifel analyst Bruce Chan.
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