Air cargo analysis reveals big variations behind Q1 declines
In-depth examination by WorldACD of global demand and pricing figures in the first quarter of 2023 highlights markets, lanes and product types still recording gains or deviating significantly from the worldwide average, plus other underlying trends.
In-depth analysis of global air freight demand and pricing figures in the first quarter (Q1) of 2023 reveals some big variations behind the overall declines, with some markets, lanes and product types still recording gains and others deviating significantly from the worldwide average, according to WorldACD Market Data.
As the air cargo data specialist reported earlier this month, worldwide air cargo chargeable weight flown in the first quarter (Q1) of 2023 ended up -11% below that of the equivalent period last year (Q1 2022). But a deep-dive into WorldACD’s data reveals that behind those figures there is a tremendous amount of variation globally, depending on factors such as origin point or region, product type, shipment weight, and whether cargo was flown via freighter or passenger belly capacity.
Big drops ex-Asia Pacific and North America
For example, the overall tonnage performance of the different main origin regions ranges from a +1% year-on-year (YoY) rise in air cargo volumes originating from Africa and from Central & South America (C&S America) to a decline of -18% from North America and a -16% drop from Asia Pacific, with Europe at -5% and Middle East & South Asia (MESA) closer to the average at -8%.
Breaking down those origin figures further reveals that the -16% drop from Asia Pacific includes a -24% decline in intra-Asia traffic and a -21% fall in traffic to North America, and more-modest declines to Europe (-10%) and Africa (-9%), YoY, despite a capacity rise of +7% ex-Asia Pacific. But that total -16% figure also hides a +30% rise in traffic ex-Asia Pacific to C&S America and a +9% rise to MESA.
Meanwhile, the -18% drop from North America comes despite a capacity rise of +9% and includes a -29% decline to Asia Pacific markets, compared with Q1 2022.
Smaller shipments keep growing
Also highly revealing is an examination of the demand profiles of different shipment weight bands, which highlights a continuing trend towards smaller shipments, correlated with the ongoing growth of e-commerce. Analysis by WorldACD reveals that shipments up to 1000 kgs increased by +3%, YoY, whereas those in the 1000-5000 kgs bracket decreased by -5% and the number of shipments greater than 5000 kgs decreased very significantly in Q1, by -18%.
From a carrier perspective, the overall decline in global demand was shared relatively evenly in terms of airlines’ regional geographic bases, although airlines from MESA (-8%) and the Americas (-8%) did best, and airlines from Africa experienced the greatest drop in cargo (-17%), with carriers from Asia Pacific (-12%) and Europe (-14%) performing slightly below the global average.
Variability among products
Examining the results on a product or verticals level, there is also considerable variation. Continuing a long-term trend towards a growing importance of special products, General Cargo experienced the biggest decline, falling -16%, YoY, whereas the various special products categories saw either a much more modest decline or growth in some verticals.
Live Animals recorded the biggest growth (+10%), with more-modest gains for Valuables (+3%), Perishables (+2%) – including Fruit & Vegetables (+3%), Fish & Seafood (+2%) and Flowers (+1%) – and Pharma/Temp products (+1%). However, there were modest declines on certain other product types including Dangerous Goods (-5%), Human Remains (-4%), Vulnerables/High-Tech (-3%), and Meat products (-2%) that meant demand for special products as a whole remained flat at 0% in Q1, YoY.
Perishables market stable
Zooming in on the relatively stable Perishables markets, where total worldwide overall volumes were up by +2%, we can see some significantly different performances among the top origin countries and between different Perishables categories.
For example, while Fruits and Vegetables ex-US Pacific states were down -20%, YoY, demand from Egypt rose by +35%. And although Fish & Seafood tonnages from Norway were down -6%, they rose by +3% from Chile and +27% from the UK. And shipments of Flowers from Ecuador rose by +10% whereas demand from Colombia was more or less stable (+1%) and increased by around +3% from Kenya.
Freighters lose market share
Unsurprisingly, given the recent pandemic and market dynamics, there was also a strong difference between the relative performance of those operating all-cargo aircraft versus passenger belly capacity, consistent with the progressive return of passenger aircraft to the market as part of post-Covid recovery.
Freighter operators experienced the largest decline (-19%) in traffic volumes compared with last year, while airlines with only passenger aircraft performed best (-2%). Airlines operating both passenger and freighter aircraft fell somewhere in the middle, recording a -11% drop in tonnages.
Key trade lanes differ
A selection of some key lanes highlights that many lanes experienced weight and rate trends that are significantly different from the worldwide average of -11% and -31%, respectively. For example, Frankfurt-Seoul recorded a -13% decline in volumes, but a +9% rise in average yields, with Milan-Hong Kong seeing a much smaller volume decline (-1%) but also achieved a rise (+4%) in average rates.
But more dramatically, while Dubai-London volumes were down by -24%, Hong Kong-Dubai tonnages rose by +38%, YoY, although average rates on that lane fell by -28% – consistent with a rise in capacity from the Far East to the Middle East, due in part to the war in Ukraine and some post-Covid reopening of Asian markets.
Last but by not least, WorldACD has done an extra-deep analysis of the dynamics of the Pharma/Temp market to reveal some highly noteworthy trend developments, particularly by splitting the Pharma/Temp category into two subcategories: shipments requiring Active cooling versus those using Passive cooling or temperature-control methods. Active cooling represents 10.6% of the total Pharma/Temp volume in Q1 of 2023, versus 10.3% last year.
The Pharma/Temp category as a whole – which accounts for around 4.1% of total worldwide flown air cargo and includes Pharma and other temperature-controlled non-perishables products – saw a worldwide rise in Q1 of almost +1% (+0.7%), YoY, partly thanks to a significant rise (+4.5%) in shipments requiring Active temperature control or cooling. In contrast, shipment volumes using Passive temperature control grew just +0.3% during this period, on a global basis.
This analysis becomes even more interesting when we examine specific lanes or origin and destination markets. WorldACD’s analysis reveals that the top 10 origins for shipments using Active cooling technology in 2023 Q1 were: USA, Germany, Switzerland, Italy, France, Belgium, Ireland, India, Austria and Netherlands. Among these, the four largest countries (USA, Germany, Switzerland, Italy) account for 56% of Active worldwide volumes.
Continuing strong growth in major Active Cooling markets
Within this group, shipments using Active cooling are growing by more than 10%, YoY, from the following origins: France (+113%), Belgium (+65%), Italy (+17%), Germany (+14%), Netherlands (+14%). Among the top 10, there were declines ex-USA (-9%), Austria (-8%) and ex-India (-5%).
In terms of destination markets, WorldACD has identified the top 10 destinations for Active cooling in Q1 2023 as: USA, China, Brazil, Japan, Canada, Australia, Switzerland, Taiwan, Belgium, South Korea, with the four largest destinations (USA, China, Brazil, Japan) accounting for 54% of worldwide volume in Active cooling.
Among this group, shipments flown using Active cooling grew by more than 10%, YoY, to the following destinations: Taiwan (+81%), USA (+44%), and Japan (+13%), with double-digit declines to China (-39%), Australia (-29%), South Korea (-18%), Brazil (-17%), and Belgium (-15%).
Region to region, the two largest regional markets (Europe to North America and Europe to Asia Pacific) account for 55% of worldwide volume in Active cooling, with double-digit YoY growth on Europe to North America (+45%), North America to MESA (+22%) and Europe to MESA (+15%).
But analysing specific origin and destination markets also reveals significant growth in certain parts of the Passive Pharma/Temp market, which still makes up almost 90% of Pharma/Temp shipments. For example, there was double-digit percentage growth from top origin markets including Italy (+45%), Ireland (+16%), India (+13%), the Netherlands (+13%) and Switzerland (+12%). And Passive Pharma/Temp shipments continued to rise to key Asia Pacific destination markets such as Taiwan (+34%), China (+20%), South Korea (+13%) and Australia (+8%), plus also to Brazil (+6%).