ANALYSIS AIR CARGO SHOWS HUGE DECLINES Q1

WorldACD Market Data has conducted a thorough analysis of global air freight demand and pricing figures in the first quarter (Q1) of 2023, revealing significant variations behind the overall declines. While worldwide air cargo chargeable weight flown in Q1 2023 was down by 11% compared to the same period in 2022, there are certain markets, lanes, and product types that have bucked this trend and recorded gains. In addition, there are other underlying trends that have emerged from the data, highlighting factors such as origin point or region, product type, shipment weight, and mode of transport (whether via freighter or passenger belly capacity).

The in-depth examination by WorldACD provides a detailed picture of the air cargo industry's performance during the first quarter of 2023, offering insights into the factors that are driving growth in certain segments while others struggle. The analysis also underscores the need for stakeholders to pay close attention to these variations and trends to optimize their operations and stay ahead of the competition in an increasingly complex and dynamic market.

Significant drops in air cargo volumes were observed in major origin regions in Q1 2023, with North America and Asia Pacific experiencing the biggest declines. According to WorldACD's analysis, air cargo volumes originating from Africa and Central & South America (C&S America) recorded a YoY increase of +1%, while Europe and Middle East & South Asia (MESA) recorded declines of -5% and -8%, respectively.

Breaking down the figures for Asia Pacific, the -16% decline in air cargo volumes includes a -24% drop in intra-Asia traffic and a -21% decrease in traffic to North America. However, there were more modest declines in traffic to Europe (-10%) and Africa (-9%) despite a capacity increase of +7% ex-Asia Pacific. Interestingly, the overall -16% figure also conceals a positive development in traffic ex-Asia Pacific to C&S America and MESA, which recorded increases of +30% and +9%, respectively.

Meanwhile, North America recorded a decline of -18% in air cargo volumes despite a capacity increase of +9%, including a significant decrease of -29% in traffic to Asia Pacific markets compared to Q1 2022.

ariability among different products is another notable finding in WorldACD's analysis of global air cargo demand and pricing figures in Q1 of 2023. The trend towards a growing importance of special products continues, with General Cargo experiencing the biggest decline of -16% YoY. In contrast, various special product categories saw more modest declines or even growth in some verticals. For example, Live Animals recorded the biggest growth at +10%, followed by Valuables (+3%), Perishables (+2%), including Fruit & Vegetables (+3%), Fish & Seafood (+2%) and Flowers (+1%), and Pharma/Temp products (+1%). However, some other product types experienced modest declines, including Dangerous Goods (-5%), Human Remains (-4%), Vulnerables/High-Tech (-3%), and Meat products (-2%). As a result, the demand for special products as a whole remained flat at 0% in Q1, YoY.

Taking a closer look at the Perishables market, which remained relatively stable with a +2% increase in overall volumes worldwide, reveals significant variations among the top origin countries and different categories of Perishables. For instance, while demand for Fruits and Vegetables from the US Pacific states saw a decline of -20% YoY, it increased by +35% from Egypt. Similarly, while tonnages of Fish & Seafood from Norway decreased by -6%, they increased by +3% from Chile and a significant +27% from the UK. Ecuador saw a rise of +10% in shipments of Flowers, whereas demand from Colombia remained relatively stable with a marginal increase of +1%, and shipments from Kenya increased by approximately +3%.

Market share shift away from freighters The impact of the pandemic and the evolving market dynamics has led to a significant difference in the performance of all-cargo aircraft versus passenger belly capacity. As passenger aircraft are gradually reintroduced to the market, airlines with only passenger aircraft performed the best (-2%), while freighter operators experienced the largest decline (-19%) in traffic volumes compared to the previous year. Airlines operating both passenger and freighter aircraft recorded a -11% drop in tonnages. Moreover, the weight and rate trends of key trade lanes vary significantly from the global average decline of -11% and -31%, respectively. For example, while Frankfurt-Seoul recorded a -13% decline in volumes, it saw a +9% rise in average yields. Milan-Hong Kong, on the other hand, experienced a much smaller volume decline of only -1% and a +4% rise in average rates. However, the most significant shift was observed on the Hong Kong-Dubai lane where tonnages rose by +38%, YoY, despite a -24% decline on the Dubai-London route. The average rates on the Hong Kong-Dubai lane fell by -28%, which can be attributed to the rise in capacity from the Far East to the Middle East due to the war in Ukraine and the post-Covid reopening of Asian markets.

In a more comprehensive analysis of the Pharma/Temp market, WorldACD has uncovered some significant trends by dividing the category into two subcategories: Active cooling and Passive cooling or temperature-control methods. Active cooling shipments make up 10.6% of the total Pharma/Temp volume in Q1 2023, compared to 10.3% last year. The Pharma/Temp category as a whole, which makes up about 4.1% of the total air cargo worldwide and includes Pharma and other temperature-controlled non-perishable products, experienced a global growth of almost +1% (+0.7%), YoY in Q1, partially driven by a significant increase (+4.5%) in shipments requiring Active temperature control or cooling. In contrast, shipments using Passive temperature control grew by only +0.3% during the same period on a global basis. This analysis becomes even more interesting when examining specific lanes or origin and destination markets. According to WorldACD's analysis, the top 10 origins for shipments using Active cooling technology in Q1 2023 were: USA, Germany, Switzerland, Italy, France, Belgium, Ireland, India, and Austria. These four largest countries (USA, Germany, Switzerland, Italy) account for 56% of Active worldwide volumes.

Continued growth in major markets Among this group, there was notable growth of over 10% YoY in shipments using Active cooling from France (+113%), Belgium (+65%), Italy (+17%), Germany (+14%), and the Netherlands (+14%). However, there were declines from the top 10 origins, including the US (-9%), Austria (-8%), and India (-5%). Regarding destination markets, WorldACD has identified the top 10 destinations for Active cooling in Q1 2023 as the US, China, Brazil, Japan, Canada, Australia, Switzerland, Taiwan, Belgium, and South Korea. The four largest destinations (the US, China, Brazil, and Japan) account for 54% of worldwide Active cooling volume. Shipments flown using Active cooling grew by more than 10% YoY to Taiwan (+81%), the US (+44%), and Japan (+13%), but there were double-digit declines to China (-39%), Australia (-29%), South Korea (-18%), Brazil (-17%), and Belgium (-15%). Regarding region-to-region shipments, the two largest regional markets (Europe to North America and Europe to Asia Pacific) account for 55% of worldwide Active cooling volume, with double-digit YoY growth on Europe to North America (+45%), North America to MESA (+22%), and Europe to MESA (+15%). However, examining specific origin and destination markets also reveals significant growth in certain parts of the Passive Pharma/Temp market, which still comprises almost 90% of Pharma/Temp shipments. For example, there was double-digit percentage growth from top origin markets including Italy (+45%), Ireland (+16%), India (+13%), the Netherlands (+13%), and Switzerland (+12%). Passive Pharma/Temp shipments also continued to rise to key Asia Pacific destination markets such as Taiwan (+34%), China (+20%), South Korea (+13%), and Australia (+8%), as well as to Brazil.