Middle Eastern carriers see 5.5% drop in March cargo volumes

Muscat: Middle Eastern carriers experienced a 5.5 percent year-on-year decrease in cargo volumes in March 2023, according to a new report.

“This, however, was also an improvement to the previous month’s decline (-7.1 percent) and the demand on Middle East-Europe routes has been trending upward in recent months with capacity increasing by 9.7 percent compared to March 2022,” the International Air Transport Association (IATA) said in the report released on Wednesday.

It further added that according to released data for March 2023 global air cargo markets showed a continued decline against the previous year’s demand performance globally and this trend began in March 2022.

Elaborating on the report IATA said that global demand, measured in cargo tonne-kilometres (CTKs), fell by 7.7 percent compared to March 2022 (-8.1 percent for international operations). “This was a slight improvement over the previous February’s performance (-9.4 percent) and half the rate of annual decline seen in January and December (-16.8 percent and -15.6 percent respectively), the report
further added.

At this point, it is unclear if this is a potentially modest start of an improvement trend or the upside of market volatility. Irrespective of this, March's performance slipped back into negative territory compared to pre-COVID levels (-8.1 percent).

The report further said that capacity (measured in available cargo tonne-kilometres, ACTK) was up 9.9 percent compared to March 2022. The strong uptick in ACTKs reflects the addition of belly capacity as the passenger side of the business continues to recover.

The IATA report cited several factors in the operating environment and noted that even with record-low unemployment rates, the global economy continues to decelerate due to a combination of factors such as tightening global financial conditions, high levels of global debt, and supply chain problems including those linked to the war in Ukraine.

In line with the weakening global trade, the Purchasing Manager Indices (PMIs) for new export orders at the global level remained below the 50-critical line for a full year as of March. China’s PMI retreated to below the 50-mark in March, following a slight improvement observed in February.

The PMI for supplier delivery times indicates high inventory levels, which tends to have a negative impact on air cargo.

“Air cargo had a volatile first quarter. In March, overall demand slipped back below pre-COVID-19 levels and most of the indicators for the fundamental drivers of air cargo demand are weak or weakening. While the trading environment is tough, there is some good news,” said Willie Walsh, IATA’s Director General.

“Airlines are getting help in managing through the volatility with yields that have remained high and fuel prices that have moderated from exceptionally high levels. Looking ahead, with inflation reducing in G7 countries, policymakers are expected to ease economic cooling measures and that would stimulate demand,” he further added.

March regional performance
Asia-Pacific airlines saw their air cargo volumes decrease by 7.3 percent in March 2023 compared to the same month in 2022. This was a slight decrease in performance compared to February (-5.4 percent).  “The drop in demand suggests that air cargo traffic in the region has not yet stabilised following China's reopening in January. Available capacity in the region increased by 23.6 percent compared to March 2022 as more belly capacity came online from the passenger side of the business” the IATA report said.

North American carriers posted the weakest performance of all regions with a 9.4 percent decrease in cargo volumes in March 2023 compared to the same month in 2022. This was a decrease in performance compared to February (-10.3 percent).  The transatlantic route between North America and Europe saw traffic declining at an accelerated pace throughout March. Capacity increased 0.4 percent compared to March 2022, the report said.

European carriers saw the most substantial improvement in demand in March over the previous month.
Airlines in the region saw their air cargo volumes decrease by 7.8 percent in March 2023 compared to the same month in 2022. This was an improvement in performance versus February (-15.9 percent). Airlines in the region continue to be most affected by the war in Ukraine. Capacity increased 8.8 percent in March 2023 compared to March 2022.