Air Freight Market Update

Air Cargo Makes a Soft Start to 2023

• Industry-wide cargo tonne-kilometers continued to decline in January, falling 14.9% YoY and marking the 11th month of consecutive annual declines. Compared with pre-pandemic levels, air cargo demand was also down 11%. Cargo capacity picked up 3.9% YoY in January, reflecting the strong recovery of belly cargo capacity in passenger airline markets.

• The economic outlook for the air cargo industry in 2023 outlook remains murky. Multiple macroeconomic headwinds stemming from the global pandemic persist and the on-going war in Ukraine has disrupted important trade flows and economic activity across various regions.

• Xeneta data shows the air cargo market would have contracted over the past four years were it not for express shipping, spurred by rapid growth in online shopping, and special cargo, such as pharmaceuticals. IATA predicts air cargo volumes will fall further this year to 5.6% below 2019 levels.

• Semiconductors and consumer electronics are major gauges of air cargo demand.

Global Industry CTKs (billions per month)

Source: IATA, Freightwaves

Ocean Freight Market Update

Concern Rising Over US West Coast Labor Pact

• Challenges due to the pandemic, China’s subsequent port closures etc. made an impact on the West Coast seaports, particularly the Ports of Los Angeles and Long Beach where they felt the influence of erratic vessel schedules and missed bookings. Global Port Tracker reports West Coast ports ended 2022 with an overall 7.5% decrease in loaded imports and an 8.6% decrease in loaded exports.

• Some of those decreases were due to the extremely high volumes created by the over-ordering of goods by shippers during the pandemic. “The continuing labor uncertainty could be a significant reason why import volumes are not shifting back to major California ports despite their improving situation,” an industry player commented. The results of the labor negotiations will determine the major priorities of the West Coast ports in 2023. A recent CNBC report indicates that only a small proportion of cargo will be rerouted back to the West Coast.

• East and Gulf Coast ports have been gaining volumes for some time, partly driven by capacity upgrades to allow handling of larger vessels coming through the Suez and expanded Panama Canals. This trend accelerated during the last few years, with East and Gulf Coast port volumes exceeding West Coast volumes in four of the last five quarters.

Is your company diverting trade from West Coast ports?

Most said that the main reason for diverting cargo away from the West Coast was the threat of an ILWU strike.

Source: Logistics Management, Floor Daily, Freightwaves, Fitch Ratings