The International Air Transport Association (IATA) has released data for July 2023 global air cargo markets, which shows a continuing trend of recovering growth rates since February.

July air cargo demand was tracking just 0.8 per cent below the previous year’s levels.

IATA says that although demand is now basically flat compared to 2022, this is an improvement on recent months’ performance that is particularly significant given declines in global trade volumes and rising concerns over China’s economy.

Global demand, measured in cargo tonne-kilometres (CTKs), tracked at 0.8 per cent below July 2022 levels (-0.4 per cent for international operations), representing a significant improvement over the previous month’s performance (-3.4 per cent).

Capacity, measured in available cargo tonne-kilometres (ACTKs), was up 11.2 per cent compared to July 2022 (8 per cent for international operations), which IATA says reflects the growth in belly capacity (29.3 per cent year-on-year) due to the summer season.

IATA reports there are several key factors influencing air cargo demand.

In July, both the manufacturing output Purchasing Managers Index or PMI (49.0) and new export orders PMI (46.4) were below the critical threshold represented by the 50 mark, indicating a decline in global manufacturing production and exports.

Global cross-border trade contracted for the third month in a row in June, decreasing 2.5 per cent year-over-year, reflecting the cooling demand environment and challenging macroeconomic conditions. The difference between the annual growth rates of air cargo and the global goods trade narrowed to -0.8 percentage points in June. While air cargo growth is still lagging world trade, the gap is the narrowest since January 2022.

In July, the global supplier delivery time PMI was 51.9, indicating fewer supply chain delays. All major economies, except China, had PMIs above 50. The US, Europe, and Japan recorded PMIs of 54.2, 57.7, and 50.4, respectively.

Inflation saw a mixed picture in July, with the increase in US consumer prices picking up pace for the first time in 13 months. Meanwhile, in China, both consumer and producer prices fell, pointing to a possible deflationary economy.

Willie Walsh, IATA’s director general, said: “Compared to July 2022, demand for air cargo was basically flat. Considering we were 3.4 per cent below 2022 levels in June, that’s a significant improvement. And it continues a trend of strengthening demand that began in February. How this trend will evolve in the coming months will be something to watch carefully.

“Many fundamental drivers of air cargo demand, such as trade volumes and export orders, remain weak or are deteriorating. And there are growing concerns over how China’s economy is developing. At the same time, we are seeing shorter delivery times, which is normally a sign of increasing economic activity.

“Amid these mixed signals, strengthening demand gives us good reason to be cautiously optimistic.”

When looking at July regional performance, African airlines had the strongest performance in July 2023, with a 2.9 per cent increase in cargo volumes compared to July 2022. Notably, Africa–Asia routes experienced significant cargo demand growth (10.3 per cent), with capacity at 11.0 per cent above July 2022 levels.

North American carriers posted the weakest performance of all regions, with a 5.2 per cent decrease in cargo volumes in July 2023 compared to the same month in 2022, marking the fifth consecutive month in which the region had the weakest performance. It was, however, a slight improvement compared to June (-5.9 per cent).  The transatlantic route between North America and Europe saw traffic declining by 4.3 per cent in July, 1.2 percentage points worse than the previous month. Capacity increased 0.5 per cent compared to July 2022.

Asia-Pacific airlines saw their air cargo volumes increase by 2.7 per cent in July 2023 compared to the same month in 2022. This was a significant improvement in performance compared to June (-3.3 per cent).

Air cargo volumes for European carriers declined by 1.5 per cent in July compared to the same month in 2022. However, this was an improvement in performance versus June (-3.2 per cent).

Middle Eastern carriers experienced a 1.5 per cent year-on-year increase in cargo volumes in July 2023. This was also an improvement to the previous month’s performance (0.6 per cent). IATA says the demand on Middle East–Asia routes has been trending upward in the past two months. Capacity increased 17.1 per cent compared to July 2022.

Latin American carriers posted a 0.4 per cent increase in cargo volumes compared to July 2022. IATA says this was a drop in performance compared to the previous month (2.2 per cent). Capacity in July was up 10.0 per cent compared to the same month in 2022.

The full ‘Air Cargo Market Analysis’ for July 2023 can be found on the IATA website.