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Preliminary WorldACD data for March suggest air cargo demand and pricing may be stabilizing, with freight rates remaining firm and tonnage down just -8% year-on-year, compared to -13% in Q4 2022 and -11 expected in Q1 2023 %all.
WorldACD analysis shows that despite market weakness over the past 12 months, global revenues in early 2023 are still the third highest in the past 15 years, and the rate is about 50% higher than pre-Covid levels.
Preliminary data for March suggest that global air cargo demand and pricing may be starting to stabilize, with average freight rates remaining around 50% above pre-pandemic levels, with year-over-year (YoY) tonnage down just -8% in March — —compared to double-digit percentage declines in the last quarter (Q4) of 2022 and early 2023, according to WorldACD market data.
tonnage drop
Preliminary figures from WorldACD show a -11% year-on-year decline in tonnage in Q1 2023 and -13% in Q4 2022, with March’s -8% year-on-year decline suggesting a moderation in the recent pattern of year-on-year declines.
The international air cargo market has remained relatively strong historically, with global revenues at the start of 2023 still the third highest in the past 15 years, despite a moderation in demand and pricing levels over the past 12 months from the exceptionally high levels of the previous year, the data showed Horizontal WorldACD analysis shows.
The analysis of key global subregions and specialty product categories also highlights a number of further positive indicators, including 14 of the 23 subregions identified by WorldACD posting positive revenue growth last year compared to overall record numbers in 2021 . It also reveals continued revenue growth in air cargo specialty products, including temperature-controlled/pharmaceutical, hazmat, flower, meat and live animal shipments, the importance of specialty products and revenue to carriers and the wider air cargo sector Continued growth.
Revenues remain near record levels
While global airfreight tonnage and average yields have been on a general downward trend since last March, to put this into wider context, WorldACD examined chargeable weight and revenue developments over the past 15 years.
Its analysis shows that last year global air cargo revenues were at their second-highest level in the 15-year period, just shy of 2021’s record levels and about double the average annual level in the decade before the Covid pandemic. On the demand side, tonnage in 2022 is on par with 2016 and higher than in any year before 2016.
Data from WorldACD shows that since March 2022, air cargo tonnage has declined month-on-month from high levels in late 2021 and early 2022, and average freight rates have been falling since September, although there are some early signs that demand and pricing may is stabilizing.
Following double-digit monthly yoy declines in October-January, tonnage was down around -9% yoy in February and around -8% in March – thus less negative than January and February (combined) , or any month in the previous quarter. Since December, average yields including surcharges appear to have stabilized at about -29% below last year’s all-time high, but remain well above pre-COVID levels.
Q1 2023 comparable to Q1 2016
Comparing the first quarter of 2023 with each of the same period in the past 15 years, it can be seen that the transaction volume in the first quarter of this year is comparable to that in the first quarter of 2016. Compared to 2022, Q1 2023 is down -11% YoY.
The global average yield in March 2023, including surcharges (in US dollars), is about 30% lower than in March 2022 and about 50% higher than the equivalent level in the pre-Covid year of 2019.
supply chain correction
While average air freight yields and total revenues remain high by historical standards, global tonnage has fallen back to around 2015 and 2016 levels.
Reports from freight forwarders and shippers suggest this may partly reflect post-replenishment inventory level adjustments in early 2022 in response to ocean freight supply chain congestion and expected congestion, as well as weak and unpredictable consumer demand in some industries .
Several sources believe that the current relatively sluggish demand will continue in the first half of this year, and that demand levels may pick up in the second half of 2023 as inventory levels fall.
The growing importance of specialty products
Meanwhile, WorldACD’s analysis highlights several areas of continued growth in tonnage or revenue. For example, WorldACD’s breakdown of air cargo product categories for February 2023 shows that while general cargo tonnage fell -14% year-on-year, total cargo volumes for the 12 special product categories tracked by WorldACD increased by +1%.
This leaves specialty products with a current share of 36% of the overall airfreight market, compared to 33% in 2019. Within these categories, vulnerable/high-tech goods were up 4% in February, live animals were up 12% compared to the same period last year, and the chargeable weight of valuables was up 3%.
For a broader, longer-term analysis of developments in special product categories versus general cargo, WorldACD analyzed the full year 2022 and 2021. Despite the decline in total tonnage and production compared to the previous year, the weight and revenue of some products will increase in 2022.
In 2022, pharmaceutical/temperature-controlled revenues will grow 11%, mainly due to a 9% improvement in yield. Hazardous Goods revenue grew +22% year-over-year due to growth in chargeable weight (+8%) and yield (+12%). Flower transportation revenue was up 10%, despite a -3% decline in volume, thanks to a +14% increase in rates. Meanwhile, general cargo revenues were down -7% year-over-year, volumes were down -8%, and yields were roughly flat at +2%.
Subregional weights and income trends
On a regional and subregional level, several regions, including South America, Southern and Central Africa, Central Asia, and the Balkans and South-Eastern Europe, recorded positive air cargo tonnage and revenue growth in 2022. Overall, 14 of the 23 subregions tracked by WorldACD recorded overall revenue growth in 2022 compared to 2021, with production growth outstripping those from origins such as Mexico, Central America, the U.S., the Caribbean, Northern Europe, Western Europe and more. Tonnage declines in origin, East Africa, West Africa and Canada. — trade arab news agency
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