African airlines report 2.8% decline in cargo demand for June

African airlines posted a 2.8 percent decline in demand in June 2023 compared to June 2022, according to the latest update from the International Air Transport Association (IATA).

"This was a decline in performance compared to the previous month (-1.9 percent). Capacity in June was down 3.7 percent compared to the same month in 2022. For the first half of the year, cargo demand slowed by 4.4 percent while capacity was up 1.6 percent," says the release.

Global air cargo markets showed the smallest year-over-year contraction in demand in June 2023 since February 2022, the release added. "Global demand, measured in cargo tonne-kilometres (CTKs), fell 3.4 percent in June compared to June 2022 (-3.7 percent for international operations). For the half year, demand slid 8.1 percent compared to the January-June period of 2022 (-8.7 percent for international operations). However, demand in June was only 2.4 percent below June 2019 levels (pre-pandemic)."

Capacity, measured by available cargo tonne-kilometres (ACTKs), increased 9.7 percent compared to June 2022, which was a slower rate compared to the double-digit growth recorded between March and May. "This reflects strategic capacity adjustments airlines are making amid a weakened demand environment. Capacity for the first half of 2023 was up 9.9 percent compared to a year ago. Capacity is now 3.7 percent above June 2019 levels."

Factors influencing demand include:

*Global cross-border trade declined 2.4 percent year-over-year in May, reflecting the cooling demand environment and challenging macroeconomic conditions. The difference between the annual growth rates of air cargo and the global goods trade narrowed to -2.6 percentage points in May, representing the smallest gap since January 2022. However, the gap still suggests that air cargo continues to suffer more than container cargo from the slowdown in global trade.

*In June, both manufacturing output Purchasing Managers Index or PMI (49.2) and new export orders PMI (47.1) were below the critical threshold represented by the 50 mark, indicating a decline in global manufacturing production and exports.

“We remain hopeful that the difficult trading conditions for air cargo will moderate as inflation eases in major economies," says Willie Walsh, Director General, IATA. "This, in turn, could encourage the central banks to loosen the money supply, which could stimulate greater economic activity."

June regional performance

Asia-Pacific airlines saw volumes decrease 3.6 percent in June YoY, and also a decline compared to May (-2.5 percent) owing to weak demand within Asian markets. The Asia-North America trade lane, however, saw improved performance. Available capacity in the region increased 24.4 percent year on year. While cargo demand was down 6.5 percent in H12023 versus the year-ago period, capacity increased 27 percent.

North American carriers reported a 6.5 percent decrease in cargo volumes, the fourth consecutive month in which the region had the weakest performance. This was, however, an improvement compared to May (-8.6 percent). Europe-North America CTKs shrank by only 2.7 percent in June, following three months of double-digit contractions. For the first half, cargo demand was down 10.5 percent while capacity dipped 0.7 percent.

European carriers experienced a 2.8 percent decrease in volumes, an improvement compared to May (-6.6 percent) in part due to the Europe-North America performance. Capacity increased 4.4 percent YoY. While demand was down 10.2 percent for the first six months of 2023 compared to last year, capacity increased 2.5 percent.

Middle Eastern carriers posted a marginal (0.5 percent) increase in cargo volumes in June 2023 versus a year ago. This was a strong turnaround from the 2.9 percent year-over-year decline registered in May. Capacity rose 11.1 percent for the month. Both Middle East-Asia and Middle East-Europe routes saw annual growth. For the first half of the year, cargo demand was down 5.6 percent with a 11.2 percent increase in capacity.

Latin American carriers had the strongest performance in June 2023 with a 7.3 percent increase in cargo volumes compared to June 2022. This was an improvement compared to May (+3.8 percent). Capacity was up 15.4 percent over the same month in 2022. For the 2023 first half, cargo demand was up 0.9 percent while capacity increased 18 percent.