Air Cargo Market Modest Growth for 2024

Air Cargo Market Modest Growth for 2024

As we head into the year, we have been speaking about the industry and now a bit more detail on the expected forecast. The air cargo industry is expected to experience a growth of 4.5% in 2024, according to the International Air Transport Association (IATA). This projection is in line with the International Monetary Fund’s forecast of a 3.5% increase in global trade, despite an estimated 3.8% fall in airfreight demand in the previous year. The growth is seen as a rebound from the recent decline, particularly in 2023, where air cargo has been decreasing, especially with a 3.8% decline.

Regionally, the growth rates vary. African carriers are anticipated to see a 1.5% increase in cargo demand, with Asia Pacific at 3.6%, Europe at 4.1%, Latin America at 7.7%, the Middle East leading with a 12.3% increase, and North America at 2.1%. Despite these growth expectations, the industry faces challenges, including geopolitical risks and economic uncertainties. These factors make predictions for 2024 difficult, and they could affect cargo capacity, especially if passenger services are reduced due to instability and higher fuel prices.

Furthermore, IATA expects cargo revenues to decline by 17.3% year-on-year in 2024 to $111.4 billion, influenced by falling yields due to increased belly capacity from passenger flights and stagnant trade. However, these yields are still expected to remain higher than historical standards. The decline in revenue this year is attributed to weaker demand, lower yields, improved ocean shipping reliability, and the return of belly capacity.

The global economic and geopolitical situation remains a concern for the industry. Experts suggest that the air cargo market might only pick up by the fourth quarter of 2024 at the earliest. The recovery is contingent on factors like geopolitical stability and central banks’ focus on growth over inflation. The industry also anticipates some volatility due to these various factors, but a small growth compared to the current year is expected. Notably, Hong Kong’s air cargo sector is likely to benefit from the full opening of its three-runway system in the coming year.

One of the key challenges facing the air cargo industry is the fluctuation in demand due to various global factors. Geopolitical tensions, wars, and conflicts can significantly impact the industry. For instance, the ongoing situation in the Middle East has delayed the recovery of air cargo by about a year. Additionally, passenger travel demands, and extreme weather conditions could also influence cargo capacity. A reduction in passenger services, often due to instability or higher fuel prices, can lead to a lack of available space in the belly hold of passenger aircraft, which is often used for cargo. This situation could benefit freighter operators, as they might pick up the slack caused by the reduced belly hold space.

However, it’s important to note that these projections are based on various assumptions, including GDP growth, inflation rates, interest rates, the strength of the US dollar, unemployment levels, jet fuel prices, recovery pace in China, and the state of global conflicts. Any significant changes in these factors could alter the projected growth rates.

In summary, while the Air cargo industry is expected to grow in 2024, this growth will be modest and subject to various global economic and geopolitical factors. Regions like the Middle East and Latin America are expected to see higher growth rates compared to other parts of the world. However, the industry must navigate through challenges such as geopolitical tensions, changes in passenger travel demands, and other global economic factors. However, these challenges are nothing new for this industry and the experts who build, manage, and innovate.