Air Freight Market Update

Freighter fleet expected to grow by 2.3% per year

• Aviation data firm Cirium is expecting the world’s freighter fleet to grow at 2.3% per year over the next 20 years. It is predicted that in total the world’s freighter fleet will reach over 4,100 aircraft by 2041 on the back of a 3.7% per year increase in cargo demand. This figure reflects the near-term boom in conversions due to air cargo market dynamics of the Covid-19 pandemic including e-commerce growth and rising feedstock availability.

• North America, home of the largest integrators and e-commerce providers, will maintain its leading share of the freighter fleet. This will edge the country ahead of Europe as the second largest global cargo market.

• Air cargo ended 2022 on a weak streak that is expected to continue well into the first half of the year, with logistics companies hanging hopes for better demand on retail inventory clearance bottoming out by summer.

• Uncertainty is the watchword for 2023. How quickly air cargo volumes bounce back depends on several wildcards: The severity of any recession that materializes; whether there will be a post-spring inventory correction resulting in strong cross-border orders; and whether inflation is skewed toward the service sector and less toward goods.

Forecast deliveries 2022-2041

Source: Air Cargo News, Freightwaves

Ocean Freight Market Update

West Coast cargo bleed to continue until labor talks are resolved: stakeholders

• Retailers and non-vessel-operating common carriers have been and will continue to route as much of their discretionary cargo as possible through East and Gulf coast ports due to uncertainties over the direction of West Coast longshore contract negotiations. That means the West Coast’s share of US imports from Asia will continue to deteriorate in 2023 Q1 and beyond.

• Sources close to the negotiations say the ILWU is “slow-walking” the talks. In the meantime, retailers are already making decisions on how they will route their spring and summer imports from Asia that will begin in earnest when workers in China return to their factories next month after the Lunar New Year holidays.

• While some importers who have been routing discretionary cargo through the East and Gulf coasts are signaling they will stick with that plan, a recent survey of shippers found that a majority of shippers likely will move much of their freight back to the West Coast. At the same time, a small but significant portion of that volume will never return. “We believe there may be a [roughly] 10% permanent shift of freight to the East Coast … creating long-term opportunities for Eastern transportation companies,” the report said.

Market share of containerized US imports from Asia by US coast

The West Coast’s share of imports coming from Asia dropped to 58.8% in 2022, the East Coast share rose to 34.2%, while the Gulf Coast share rose to 6.7%.

Source: S&P Global, Strategic Sourceror, Dcvelocity, JOC