IATA has lowered its expectations for air cargo revenues and yields for the year due to growing capacity and a weak demand outlook.
In its latest airline profitability report, the airline association predicted cargo revenues of $142.3bn this year, which is 31.3% down on last year and behind the $149.4bn that was previously expected.
Meanwhile, cargo yields are expected to be 28.6% behind last year, worse than the 23% fall IATA predicted at the World Cargo Symposium in April.
“Yields will be negatively impacted by two factors: the ramping-up of passenger capacity which automatically increases available belly capacity for cargo and the potential negative effects on international trade of economic cooling measures introduced to fight inflation,” IATA said.
However, the airline association also pointed out that both revenues and yields remained far above pre-Covid levels.
Figures provided by the association show that cargo revenues stood at $100.8bn in 2019, $140.4bn in 2020, $210bn in 2021 and $207bn last year.
And yield increases of 54.7% were recorded in 2020, 25.9% in 2021 and 7.4% in 2022.
Meanwhile, cargo traffic in cargo tonne km terms is expected to decline by 3.8% on last year and by 5.5% compared with 2019.
Cargo tonnages have experienced 13 months in a row of year-on-year declines since March 2022 while capacity has been steadily increasing due to the restart of passenger operations.
“One of the main drivers behind the growth in available cargo tonne km (ACTKs) has been the recovery in bellyhold capacity as passenger aircraft return to service in various markets,” said IATA.
“Nevertheless, global capacity has still not returned to its pre-Covid levels. In the first quarter of 2023, seasonally adjusted ACTKs were 6.4% lower than in Q1 2019.”
Air cargo revenues are also affected by lower ocean freight rates, which have seen cargo shift back to box shipping after a Covid-related boost for air cargo.
While the cargo market continues to face mounting pressure, the overall airline industry’s profit forecast was doubled from IATA’s initial projection to a net profit of $9.8bn this year.
“Stronger profitability is supported by several positive developments,” IATA director general Willie Walsh said.
“China lifted Covid-19 restrictions earlier in the year than anticipated. Cargo revenues remain above pre-pandemic levels even though volumes have not. And, on the cost side, there is some relief. Jet fuel prices, although still high, have moderated over the first half of the year.”
By Damian Brett