GLOBAL demand has weakened since this year's April high and is not expected to surge in the usual pre-Christmas peak season, according to DHL's Global Forwarding's latest Airfreight State of the Industry report.
Moreover, reduced consumer purchasing power will not help, the report said, which uses data from the International Monetary Fund, the International Air Transport Association, Seabury, WorldACD, IHS Markit Group and DGF Desk Research.
Lower sales and high inventory levels caused by reduced export orders will also not offer the industry any succour, nor will high inflation rates around the world that are causing uncertainty now and are likely to remain in force into 2023.
The ongoing war in Ukraine is of course having an impact on the air freight sector, both in terms of cargo movements and capacity.
The report also pointed to a trend of air shipments being converted into ocean freight, with shippers likely to shift away from air cargo as ocean-going vessel schedule reliability continues to improve.
Overall air freight capacity was up by 18 per cent in October compared to the same month of 2021, with month-to-month increases continuing (although global air freight capacity in October was down five per cent compared to the same month of 2019).
The report described the greater capacity being made available as "encouraging", but also pointed out that high jet fuel prices remain a challenge, with there having been only small signs of late of fuel prices softening.
With increasing capacity but sluggish demand for air freight, it is no surprise that the cargo load factor is falling. Indeed, the industry-wide cargo load factor fell by eight per cent year on year in August.
Freight rates are suffering on most lanes, meanwhile. In August this year, average global rates were six per cent higher than in the same month of 2021, but month-to-month declines are continuing.
DHL expects to see an aggressive spot market in operation, with fuel surcharges also likely to fluctuate as jet fuel prices rise.
For the rest of this year and into 2023, DHL is predicting further Covid outbreaks potentially impacting air cargo operations, with the sector also hit by airport backlogs caused by staff shortages.
Improving passenger service demand will create greater bellyhold cargo capacity, but demand for that capacity is likely to remain subdued, not least because of high inflation, soaring energy prices and low GDP growth around the world.
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