Global air cargo demand continued to grow in January, though at a softer pace, according to the latest International Air Transport Association (IATA) data.

Supply chain disruptions and capacity constraints, as well as a deterioration in economic conditions for the sector dampened demand, IATA said.

Measured in cargo tonne-kilometres, global demand was up 2.7 per cent compared to January 2021 (3.2 per cent for international operations). This was significantly lower than the 9.3 per cent growth seen in December 2021 (11.1 per cent for international operations).

Capacity was 11.4 per cent above January 2021 (10.8 per cent for international operations), IATA’s figures showed. “While this is in positive territory compared to pre-Covid-19 levels, capacity remains constrained, 8.9 per cent below January 2019 levels,” the organisation said.

IATA noted supply chain disruptions resulting from flight cancellations due to labour shortages, winter weather and to a lesser extent the deployment of 5G in the US, as well as the zero-Covid policy in mainland China and Hong Kong.

The Purchasing Managers’ Index (PMI) indicator tracking global new export orders fell below the 50-mark in January for the first time since August 2020, IATA said, indicating that a majority of surveyed businesses reported a fall in new export orders.

The January global Supplier Delivery Time Purchasing Managers Index (PMI) was at 37.8. “While values below 50 are normally favourable for air cargo, in current conditions it points to delivery times lengthening because of supply bottlenecks,” the organisation commented.

Another factor influencing demand is that the inventory-to-sales ratio remains low. IATA thinks this is positive for air cargo as it means manufacturers may turn to air cargo to rapidly meet demand.

“Demand growth of 2.7 per cent in January was below expectation, following the 9.3 per cent recorded in December,” said IATA’s director general Willie Walsh. “This likely reflects a shift towards the more normal growth rate of 4.9 per cent expected for this year. Looking ahead, however, we can expect cargo markets to be impacted by the Russia-Ukraine conflict. Sanction-related shifts in manufacturing and economic activity, rising oil prices and geopolitical uncertainty are converging. Capacity is expected to come under greater pressure and rates are likely to rise. To what extent, however, it is still too early to predict.”

The Russia-Ukraine conflict will have a negative impact on air cargo, IATA stated. “Airspace closures will stop direct connectivity to many markets connected to Russia,” it said. “Overall, the impact on global markets is expected to be low as cargo carried to/from/within Russia accounted for just 0.6 per cent of the global cargo carried by air in 2021. Several specialised cargo carriers are registered in Russia and Ukraine, particularly those involved with heavy lift operations.”