2023 brought forth a myriad of challenges, shaping the industry’s landscape. From geopolitical situations to sustainability pressures, the airfreight market grappled with a complex set of factors.

“It was a very challenging year with significant belly capacity returning to the market whilst demand continued to be subdued based on uncertainty impacting consumer confidence and sentiment,” Glyn Hughes, Director General of The International Air Cargo Association (TIACA), explained.  “Inventory levels remain very high and many Purchasing Managers’ Index (PMI) measures indicate that 2024 will commence with a similar soft market, although volumes did uptick slightly as 2023 concluded.” 

Industry focus

The airfreight sector continues to see challenges in Europe arising from labour issues, softening economies and regulatory challenges associated with noise and pollution.  

Intra African trade continues to experience difficulties with restricted border movements, high levels of taxation and inconsistent demand across the region.   

Asia experienced slower recovery post-Covid with Chinese and other markets slow to return passenger belly capacity, AND this impacted cargo connectivity.  

India has seen growth in a number of areas of manufacturing which has also generated air cargo volume growth. 

Imports into the US have also been strong as US consumer activity didn’t slow to the same degree as the European market.    

“Members of TIACA are concerned about ongoing uncertainty: weak demand, increasing capacity, diminishing yields, workforce challenges, the pace of technology adoption, increased environmental challenges coupled with enhanced reporting obligations,  as well as infrastructure challenges as we see pressure from some authorities to restrict slots or night operations citing noise and pollution concerns,” Hughes highlighted. 

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e-commerce opportunity

As 2023 concludes, the airfreight industry sees very significant e-commerce volumes coming out of China as the seasonal shopping events continue to strike positive notes across the economy. 

“e-commerce continues to provide significant increases in volumes, pharmaceutical shipments have also showed steady growth with perishable business also holding up well,” Hughes stated. “High tech has also shown growth vs 2022 as well as above 2019 pre-Covid volumes. Going forward, we can expect to see positive impacts on air cargo derived from some politically motivated changes in the global economic environment.” 

The air cargo sector is witnessing an acceleration of manufacturing diversification as governments seek to encourage supply chain de-risking – the “China plus one policy”.  This was a policy derived from discussions within the G7 as China’s production has reached over 26% of global activity.  G7 members felt that such a concentration of production left countries exposed, this was evidenced towards the end of Covid as China was slow to resume normal production capability. 

“New production sites in India and Vietnam have already started to generate some significant increases in volumes. Additional opportunities will arise for air cargo as the impacts of recently agreed trade pact agreements start to generate intra-regional business development,” Hughes continued. “ The Regional Comprehensive Economic Partnership (RCEP) is the first free trade agreement that includes China, Japan and South Korea and incorporates the 10 ASEAN states.  Collectively, the RCEP covers over 30% of global GDP and over 30% of the world’s population.  The removal of trade barriers will significantly increase intra-regional supply chains as manufacturing is expected to grow as a result.”   

Going green

TIACA conducts an annual sustainability survey to assess overall industry positioning with regards to sustainable transformation and the 2023 edition reflected the growing importance of the topic with respondents indicating that they are receiving pressures from customers, partners, employees, governments, financial institutions and local communities to improve environmental performance.  

With the industry having to change, the International Civil Aviation Organisation (ICAO), following its recent Conference on Aviation and Alternative Fuels (CAAF)/3 meeting agreed a 5% CO2 reduction by 2030.

“Carbon taxes are starting to work their way through supply chains with some state imposed taxes adding considerably to transport costs.  Access to suitable volumes of sustainable aviation fuel (SAF) has been extremely restricted, although many deals agreed between carriers and large shipper clients are a great indication that air cargo is leading.  Additionally, we are seeing emissions trading and carbon offset programmes gaining traction,” Hughes said. “However, SAF availability during 2023 equated to only 0.2% of global aviation fuel requirements.  With a cost of 2-3 times greater than the normal price of jet kerosene, considerable private investment will be required to produce the scale of fuel that will be required at a competitive price.”

“I think we can be proud of the efforts already being made by the air cargo and aviation industry,” Hughes outlined. “From investment in electrification of vehicles to installation of solar panels to investing in modern fleets to purchasing every drop of SAF even though it comes with a cost premium, it’s clear that much has been done but even more needs to happen.”  

“The recent ICAO declaration was a string message to energy markets, investor pools and customers that this industry is serous about doing our part to limit global temperature increases to 1.5c as per the Paris Agreement.  Many companies are also investing in carbon offset programmes consistent with Science Based Target Initiatives (SBTI) as per Article 6.” 

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Supporting the sector

As the only global association with members from across the entire industry, TIACA is looking to use a strong collective voice, backed by on-the-ground experience, to influence policy makers and regulators, especially during this period of uncertainty for airfreight. 

“We are focused on sustainability, with industry supporting tools and programmes such as BlueSky, an annual sustainability survey, sustainability roadmaps and an awards programme designed to shine a spotlight on areas of inspirational leadership,” Hughes said.  

“We also focus attention on supporting the next generation workforce with participation in a number of programmes designed to encourage next gen leaders and workers to follow a career in air cargo and logistics.  

“We encourage digital solutions wherever possible by using our voice to promote the benefits and opportunities afforded by modern tech solutions.  

“We encourage our global member network to connect and increase global supply chain solutions.   

“We connect with the industry and educate on current and future developments through our event portfolio, such as our Regional Events, Executive Summit and our flagship event the Air Cargo Forum which brings over 3,500 people together with over 220 exhibiters to the Miami Beach Convention Center, 12-14th November, 2024.  

“We also have some exciting new initiatives planned for the coming 12 months supporting the area of training, sustainability and jobs.”