Understanding the the size and impact of eCommerce demand on the air cargo market and its short-term outlook is challenging due to the lack of direct data, with the best indications coming from anecdotal comments and market observation.
In 2023, the air cargo market was subdued primarily due to a slowdown in demand and was significantly below the peak volumes of 2021 when pandemic-induced demand boosted volumes.
By mid-2023, air cargo traffic had recorded 17 consecutive months of year-over-year declines from Q1 2022 to the start of Q3 2023. However, air cargo demand has since experienced 10 consecutive months of year-over-year growth, with double-digit growth recorded over the last six months.
This strong demand is expected to continue in the second half of the year, although growth will likely slow to single digits compared to the stronger second half of 2023.
US customs data shows air trade down 9% on the transpacific, contrasting sharply with the 21% growth reported by airline traffic. This discrepancy is due to the ‘de minimis’ thresholds of US customs authorities, which allow shipments below $800 to be imported duty-free.
Since eCommerce shipments are usually below this value, customs-based trade data often excludes eCommerce volumes, whereas traffic statistics capture them. As eCommerce demand continues to grow, the gap between these indicators has widened significantly since 2022.
While air cargo traffic data provides a better picture of true demand, it has a significant lag of up to three months, making it difficult to adjust strategy in real time. On high-demand trade lanes like the transpacific, real-time air cargo capacity serves as a useful barometer of air cargo traffic, especially on lanes heavily impacted by eCommerce.
With eCommerce volumes representing a sizeable share of air cargo demand out of Asia, there are natural concerns about the industry’s reliance on cross-border eCommerce volumes.
The short-term outlook for the air cargo market is closely linked to three issues:
First, changes to ‘de minimis’ thresholds could impact eCommerce shipments, but no significant changes are imminent. There are no signs of a decrease in air cargo demand into the US.
Second, while US consumer spending shows signs of slowing, eCommerce demand remains robust.
Third, the supply side faces challenges in obtaining capacity due to reductions in deliveries of wide-body freighters. For instance, engine supply issues and quality assurance efforts have limited Boeing’s deliveries of B777-200LRF freighters. Carriers, most recently Air France/KLM, have taken freighter capacity out of other markets to focus on the growing market out of Asia.
In conclusion, the transpacific air cargo market is expected to remain strong in the second half of 2024, driven by eCommerce demand and capacity challenges. This demand will continue to play a key role in both established and emerging markets, despite challenges related to customs regulations, consumer spending, and capacity constraints.
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