Andrew Matters, head of policy analysis at Iata, gives an overview of the air cargo outlook at an event in Geneva. Photo: Iata
Andrew Matters, head of policy analysis at Iata, gives an overview of the air cargo outlook at an event in Geneva. Photo: Iata

Global air cargo volume to decline 4% in 2023 amid slower economic growth, says Iata


Deena Kamel

Global air cargo volumes are forecast to decline 4 per cent year-on-year in 2023, after an 8 per cent drop this year, amid challenging economic headwinds, the International Air Transport Association (Iata) said.

Cargo volume will decrease to 57.7 million tonnes next year, down from 60.3 million tonnes this year, as the market cools down after strong periods of growth during the Covid-19 pandemic, Iata said in its latest forecast on Wednesday.

"This primarily reflects the more challenging global economic backdrop both in terms of global economic growth but also in terms of international trade," Andrew Matters, head of economic analysis and policy at Iata, told reporters in Geneva. "We're also expecting to see that yields are going to unwind in 2023."

Cargo yields will drop 22.6 per cent next year, following a rise of 7.2 per cent this year, according to Iata's forecasts. This is a slowdown from the highs of 52 per cent growth in yields in 2020 and 24 per cent last year during the Covid-19 pandemic.

"We don't think that's sustainable," Mr Matters said. "A 22 per cent [decline] sounds pretty dramatic but ... you can see it doesn't look too unreasonable at all and the reason for that, of course, is the very strong increases we've seen in recent years. The unwind we're seeing follows those three pretty strong years of yield increases."

With lower yield and volume, cargo revenue is also forecast to decline.

Cargo revenue is expected to reach $149.4 billion next year, down from $201.4 billion this year, but this is still about 50 per cent higher than its pre-pandemic levels, Iata says.

Cargo's share of total revenue of airlines is therefore also expected to decline.

The cargo business' share of total revenue peaked at 40 per cent last year, which will ease to 28 per cent this year and drop further next year to 19 per cent, Mr Matters said.

This is due to the decline in cargo revenue and the simultaneous increase in passenger revenue, he said.

"We think the air cargo market is cooling after what has been a very strong and very unusual period for the market and we expect that this is going to continue into 2023," Mr Matters said. "It's not all bad news, a lot of it is just coming back from unsustainably high levels."

Freighter deliveries

At the same time as air cargo demand is moderating, freighter deliveries to airlines are reaching peak levels.

The rolling two-year average of freighter deliveries is at its highest point since 2012, Mr Matters said.

This additional freighter capacity, along with the ongoing recovery in belly capacity as airlines return more passenger jets into service, will pressure cargo yields, he said.

Gulf airlines such as Emirates and Qatar Airways have recently invested in freighter orders to expand their cargo fleet.

However, there is always a lag between ordering and delivery of aircraft and the long-term outlook for cargo is a "much more positive story", Mr Matters said.

"Airlines that are putting in orders now, by the time they take delivery of those aircraft, we could well be in that period of upswing where volumes have picked up, so the timing could be spot on," he said. "The long-term outlook is more positive for air cargo than what we're looking at for 2023."

Upside risks to the outlook

Despite the softening freight market indicators for next year, the upside risks to the air cargo outlook are "not insignificant", Mr Matters said.

For example, if the Russia-Ukraine war was resolved soon, then business and consumer confidence would rebound "quite quickly", leading to a recovery in economic activity, consumer spending, business investment and international trade — all of which would be positive for the air cargo market going forward, he said.

Continued global supply chain disruption may adversely affect the shipping industry and present an opportunity for air cargo growth as businesses try to plug the gaps in their inventory, he said.

E-commerce growth

The air cargo sector is also expected to continue to benefit from e-commerce demand that boomed during the pandemic when people were shopping online due to lockdown measures.

The value of e-commerce globally is expected to reach $5.7 trillion this year and $7.3 trillion in 2025, Brendan Sullivan, Iata's global head of cargo, said on Wednesday.

Online retail sales globally have reached 21 per cent this year and even with the drop in consumer spending overall, are forecast to continue to grow overall, he said.

This translates to 159 billion parcels sent this year, about four times more than eight years ago.

The number of parcels sent in 2014 was 143 billion and this will nearly double by 2027 to 260 billion parcels, Mr Sullivan added.

About 80 per cent of cross-border e-commerce is shipped by air, showing that air cargo is built to support e-commerce demand, he said.

About 18-20 per cent of air cargo is e-commerce, according to Iata.

The specs

Engine: 3.9-litre twin-turbo V8

Transmission: seven-speed

Power: 720hp

Torque: 770Nm

Price: Dh1,100,000

On sale: now

Know your cyber adversaries

Cryptojacking: Compromises a device or network to mine cryptocurrencies without an organisation's knowledge.

Distributed denial-of-service: Floods systems, servers or networks with information, effectively blocking them.

Man-in-the-middle attack: Intercepts two-way communication to obtain information, spy on participants or alter the outcome.

Malware: Installs itself in a network when a user clicks on a compromised link or email attachment.

Phishing: Aims to secure personal information, such as passwords and credit card numbers.

Ransomware: Encrypts user data, denying access and demands a payment to decrypt it.

Spyware: Collects information without the user's knowledge, which is then passed on to bad actors.

Trojans: Create a backdoor into systems, which becomes a point of entry for an attack.

Viruses: Infect applications in a system and replicate themselves as they go, just like their biological counterparts.

Worms: Send copies of themselves to other users or contacts. They don't attack the system, but they overload it.

Zero-day exploit: Exploits a vulnerability in software before a fix is found.

COMPANY PROFILE
Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Revibe%20%0D%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202022%0D%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Hamza%20Iraqui%20and%20Abdessamad%20Ben%20Zakour%20%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%20%0D%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Refurbished%20electronics%20%0D%3Cbr%3E%3Cstrong%3EFunds%20raised%20so%20far%3A%3C%2Fstrong%3E%20%2410m%20%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EFlat6Labs%2C%20Resonance%20and%20various%20others%0D%3C%2Fp%3E%0A
Singham Again

Director: Rohit Shetty

Stars: Ajay Devgn, Kareena Kapoor Khan, Ranveer Singh, Akshay Kumar, Tiger Shroff, Deepika Padukone

Rating: 3/5

APPLE IPAD MINI (A17 PRO)

Display: 21cm Liquid Retina Display, 2266 x 1488, 326ppi, 500 nits

Chip: Apple A17 Pro, 6-core CPU, 5-core GPU, 16-core Neural Engine

Storage: 128/256/512GB

Main camera: 12MP wide, f/1.8, digital zoom up to 5x, Smart HDR 4

Front camera: 12MP ultra-wide, f/2.4, Smart HDR 4, full-HD @ 25/30/60fps

Biometrics: Touch ID, Face ID

Colours: Blue, purple, space grey, starlight

In the box: iPad mini, USB-C cable, 20W USB-C power adapter

Price: From Dh2,099

COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%3A%3C%2Fstrong%3E%20Eco%20Way%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%20December%202023%3Cbr%3E%3Cstrong%3EFounder%3A%3C%2Fstrong%3E%20Ivan%20Kroshnyi%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%2C%20UAE%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Electric%20vehicles%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Bootstrapped%20with%20undisclosed%20funding.%20Looking%20to%20raise%20funds%20from%20outside%3Cbr%3E%3C%2Fp%3E%0A
How to increase your savings
  • Have a plan for your savings.
  • Decide on your emergency fund target and once that's achieved, assign your savings to another financial goal such as saving for a house or investing for retirement.
  • Decide on a financial goal that is important to you and put your savings to work for you.
  • It's important to have a purpose for your savings as it helps to keep you motivated to continue while also reducing the temptation to spend your savings. 

- Carol Glynn, founder of Conscious Finance Coaching

 

 

Teenage%20Mutant%20Ninja%20Turtles%3A%20Shredder's%20Revenge
%3Cp%3E%3Cstrong%3EDeveloper%3A%20%3C%2Fstrong%3ETribute%20Games%3Cbr%3E%3Cstrong%3EPublisher%3A%3C%2Fstrong%3E%20Dotemu%3Cbr%3E%3Cstrong%3EConsoles%3A%20%3C%2Fstrong%3ENintendo%20Switch%2C%20PlayStation%204%26amp%3B5%2C%20PC%20and%20Xbox%20One%3Cbr%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A

JUDAS AND THE BLACK MESSIAH

Directed by: Shaka King

Starring: Daniel Kaluuya, Lakeith Stanfield, Jesse Plemons

Four stars

COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4
The specs

Engine: 1.5-litre turbo

Power: 181hp

Torque: 230Nm

Transmission: 6-speed automatic

Starting price: Dh79,000

On sale: Now

UAE currency: the story behind the money in your pockets
Updated: May 17, 2023, 4:41 PM

Checking In

Travel updates and inspiration from the past week

      By signing up, I agree to The National's privacy policy
      Checking In