Skip to main content

Air Cargo Outlook Has Russia-Ukraine War on the Horizon

The International Air Transport Association (IATA) released data for global air cargo markets on Wednesday showing slower growth in January, as supply chain disruptions and capacity constraints, as well as a deterioration in economic conditions for the sector, dampened demand.

Global air freight demand was up 2.7 percent compared to January 2021, significantly below the 9.3 percent growth in December. Capacity was 11.4 percent above a year earlier, but IATA said it still remains constrained and was 8.9 percent below January 2019 levels.

IATA noted that supply chain disruptions resulted from flight cancellations due to labor shortages, winter weather and to a lesser extent the deployment of 5G in the U.S., as well as the zero-Covid policy in mainland China and Hong Kong.

“Demand growth…was below expectation,” Willie Walsh, IATA’s director general, said. “This likely reflects a shift toward the more normal growth rate of 4.9 percent expected for this year. Looking ahead, however, we can expect cargo markets to be impacted by the Russia-Ukraine conflict. Sanction-related shifts in manufacturing and economic activity, rising oil prices and geopolitical uncertainty are converging. Capacity is expected to come under greater pressure and rates are likely to rise. To what extent, however, it is still too early to predict.”

IATA said the Russia Ukraine conflict will have a negative impact on air cargo, with airspace closures stopping direct connectivity to many markets connected to Russia. Overall, the impact on global markets is expected to be low, however, as cargo carried to, from and within Russia accounted for just 0.6 percent of the global cargo carried by air in 2021. Several specialized cargo carriers are registered in Russia and Ukraine, however, particularly those involved with heavy lift operations.

Related Stories

Looking at regional performance, Asia-Pacific airlines saw their air cargo volumes increase 4.9 percent in January compared to the same month in 2021. This was significantly below the previous month’s 12 percent expansion.

“Available capacity in the region was up 11.4 percent compared to January 2021, however it remains heavily constrained compared to pre-Covid-19 levels, down 15.4 percent compared to 2019,” IATA said. “The zero-Covid policy in mainland China and Hong Kong is impacting performance. Preparations for the Lunar New Year holiday may have also had an impact on volumes, but it is difficult to isolate.”

North American carriers posted a 1.2 percent decrease in year-over-year cargo volume in January, compared to December’s 7.7 percent increase.

“Supply chain congestion due to labor shortages, severe winter weather and issues with the deployment of 5G as well as a rise in inflation and weaker economic conditions affected growth,” IATA said. “Capacity was up 8.7 percent compared to January 2021.”

Cargo volume for European airlines rose 7 percent in January compared to the same month in 2021. While this was slower than the previous month’s 10.6 percent gain, Europe was more resilient than most other regions, the report noted, adding that European carriers benefited from robust economic activity and an easing in capacity, which was up 18.8 percent over a year earlier.

Middle Eastern carriers experienced a 4.6 percent decline in cargo volume in the month–the weakest performance of all regions. This was due to a deterioration in traffic on several key routes such as Middle East-Asia and Middle East-North America, IATA noted. Capacity was up 6.2 percent compared to January 2021.

Latin American airlines reported an 11.9 percent increase in cargo volume in January compared to the 2021 period. Capacity was down 12.9 percent year over year.

Cargo volume for African airlines increased 12.4 percent in the month compared to January 2021, making it the strongest-performing region. Capacity was 13 percent above January 2021 levels.