August 2024 was another strong month for the airfreight industry, with global air cargo traffic increasing by 11.4% year-over-year, measured in cargo tonne-kilometres (CTK) and marking the ninth consecutive month of double-digit expansion. To underscore the sustained recovery in the air cargo sector, the International Air Transport Association (IATA) highlighted robust international traffic, which rose by 12.4% compared to August 2023, with airlines based in Asia-Pacific and Latin American regions leading the expansion, said an analysis by Drewry.
E-commerce and sea-air conversion traffic remain key growth drivers
Since the last quarter of 2023, e-commerce exports from China, together with sea-air traffic routed through South Asia and Middle Eastern transit hubs, have been key drivers of global airfreight growth with both areas making-up for softer industrial activity, which has historically been a primary contributor to air cargo demand. The continued boom in e-commerce and mixed-modal logistics reflects shifting consumer behaviour and preferences which have boosted demand for airfreight services as businesses strive to meet delivery expectations.
Capacity growth continues to lag traffic adding pressure to supply chains
While airfreight traffic surged, global airfreight capacity, measured in available cargo tonne-kilometres (ACTK), expanded by only 6.2% year-over-year in August, which marked the sixth consecutive month in which capacity growth has lagged demand, creating supply pressures. Regionally, airlines based in Africa (10.5%), Europe (9.4%) and Asia-Pacific (8.6%) led capacity expansion. However, even with increased cargo space on passenger flights – up 10.9% in August – belly capacity growth was at its slowest pace since the second quarter of 2021. Meanwhile, dedicated freighter capacity increased more modestly by 5.0% year-over-year.
In October, the strike at US East Coast and Gulf ports had raised concerns of damaging disruptions to supply chains, however, its relatively swift resolution helped stabilise pricing and alleviate uncertainty within international airfreight markets, easing pressure on logistics providers.
Improvements in load factor and yield signal market strength
Global air cargo load factors have also improved, reaching 44.0% in August, a 2.0 percentage-point increase from the previous year. European airlines led the industry with a 50.1% cargo load factor, while Asia-Pacific and Middle East carriers followed closely with load factors of 46.6% and 44.5%, respectively. This increase in load factors has contributed to a steady rise in industry-wide cargo yields, which has been a consistent trend throughout 2024, reflecting healthy demand.
Outlook for Q4 2024 and beyond: E-commerce and capacity constraints
The outlook for air cargo remains optimistic, with growth expected to continue into the fourth quarter of 2024. However, capacity constraints from the leading aerospace manufacturers could create bottlenecks should demand continue to grow into 2025. Proposed legislation in several developed economies, however, could impact e-commerce growth, potentially affecting airfreight demand in the long term. Nevertheless, relatively high container shipping rates compared to airfreight costs continue to make air cargo an attractive option for shippers during the current peak season.
Conclusion
In summary, August 2024 was another strong month for the airfreight industry, propelled by sustained e-commerce growth and the strategic use of sea-air conversion routes. While capacity constraints and potential regulatory changes could present challenges in the longer term, current trends indicate a positive trajectory for air cargo with demand remaining strong across global markets, the analysis emphasised.