Air Cargo Demand Soars in July

Air cargo’s hot streak in 2024 isn’t slowing down.

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Total demand for air cargo rose by 13.6 percent year over year in July, which marks the eighth-straight month of double-digit annual growth, according to the International Air Transport Association (IATA).

Demand is showing strength from month to month as well, with seasonally adjusted global cargo tonne-kilometers (CTKs) growing by 1 percent over June.

This expansion led to the highest level of industry CTKs since the record-breaking demand achieved at several points throughout 2021. At the time, air cargo demand jumped 18.7 percent from 2020 levels, which was the second-biggest annual demand improvement tracked by the IATA behind 2010’s 20.6 percent gain.

“Air cargo demand hit record highs year-to-date in July with strong growth across all regions,” said Willie Walsh, IATA’s director general in a statement. “With the peak season still to come, it is shaping to be a very strong year for air cargo. And airlines have proven adept at navigating political and economic uncertainties to flexibly meet emerging demand trends.”

The association said the global IT outage affecting Microsoft systems worldwide did not visibly curb July’s global traffic volumes, despite thousands of flight delays, cancellations, and cargo backlogs that lasted for over a week.

International routes surged 14.3 percent year over year, pushing up global traffic levels.

Airlines registered in Asia Pacific, the Middle East, and Europe delivered the highest annual growth rates in international CTK, registering 17.7 percent, 14.7 percent and 13.9 percent increases, respectively. Carriers from Asia Pacific and Europe have been strong throughout the year, contributing 44 percent and 22 percent to the global surge in CTKs from April through June.

The IATA did note that the strong year-over-year growth rates have benefited from an overall weak 2023 market, when cargo volumes were down because cautious wholesalers and retailers decided to draw down inventory before making new orders.

With that in mind, air freight ecosystem has been impacted by various factors worldwide. Walsh said that the air cargo business “continues to benefit from growth in global trade, booming e-commerce and capacity constraints on maritime shipping,” referring to the rise of overseas players like Shein and Temu and the ongoing rerouting of ships away from the Red Sea . The AITA’s market analysis said the capacity constraints favor a partial modal shift from sea to air.

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This shift could continue, and more capacity should be gobbled up, as the holiday season gets closer and shippers share concerns about late shipments.

Niall van de Wouw, chief air freight officer at Xeneta, said in a recent webinar that just 49 percent of ocean shipping services from Asia to Europe were on time in June, attributing the delays to the Red Sea crisis. The on-time rate is a significant decline from 70 percent in June 2023.

Air cargo capacity grew 8.3 percent compared to July 2023, so it isn’t outpacing demand numbers. But it is still going strong, as industrywide available CTKs (ACTKs) rose 4.2 percent compared to the month prior and 0.7 percent after seasonal adjustment. With July in the books, year-to-date capacity has reached record levels.

International routes drove a wider portion of the expansion with a 10.1 percent growth in ACTKs last month.

IATA said the capacity increase was led by a 12.8 percent improvement in international belly capacity and a 6.9 percent growth in international freighter capacity.

“It is worth noting, however, that the latest belly-hold capacity growth statistic was the lowest recorded in a total of 40 months,” the market analysis said. “With global passenger belly capacity fully recovered to 2019 values, the question emerges as to whether this impressive growth in the international passenger market will normalize and how this will impact the use of dedicated freighters. Currently, the slowing expansion of international belly capacity is confronted with a slowly accelerating growth in dedicated freighter capacity.”

Global air freight rates, including surcharges, grew by 7.4 percent from the year prior, marking the highest annual increase in almost two years. According to the IATA, July’s global IT outage likely boosted the price for capacity for a short period. Rates also increased 1.2 percent from June.

The peak season might exacerbate the current upward pressure points on rates, as more shippers compete with the likes of Temu and Shein for air cargo capacity.

Air freight rates are up 41 percent above 2019 levels, the association says.

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