In 2022, the air cargo market continued to shrink

The air cargo market continued 18 months of record growth in October as consumers tightened their wallets as the global economy slowed and services spending increased.

The aviation industry has entered a typical peak season, but shipping activity shows little sign of increasing. Demand and freight rates should usually rise, but will fall.

Market intelligence firm Xeneta reported last week that freight volumes in the air cargo market fell 8% in October from a year earlier, marking the eighth straight month of falling demand.

Since September, the decline has deepened further, with freight volume down 5% year-on-year and 0.3% compared with three years ago.

Last year's record levels were unsustainable due to pandemic-related shortages and supply chain disruptions, and demand in October was also down 3pc from 2019, which was a weak year for air cargo.

The recovery of production capacity has also stagnated.According to Xeneta, available belly and cargo space is still 7% below current levels, which is one reason freight rates remain relatively high.

Additional air capacity from the reintroduction of more passenger flights over the summer, coupled with lower demand, means planes are full and profits are reduced.

In October, the global spot air freight rate was lower than last year's level for the second consecutive month.

Xeneta said the small increase in the second half of the year was due to higher special freight rates, while grocery rates continued to fall.

EXP from Asia Pacific to Europe and North America increased slightly in late October, which may be related to the rebound during the Chinese Golden Week holiday, when factories closed instead of shipments, instead of a surge late in the peak season.

Most importantly, global air freight rates have fallen by two-thirds since December, or about 25 percent year-on-year, to $3.15 per kilogram.But it remains almost double its 2019 level due to capacity shortages, labor shortages at airlines and airports and limited flight and warehouse productivity.Air freight rates have not dropped as much as sea freight rates.

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