The global air cargo industry continues to see traffic growth in October, with freight rates seeing a sharp increase. The prospect of an increase in customs duties in 2025 should reinforce the trend in the last months of the year.
1/ The evolution of supply and demand
- October 2024 traffic
Global air cargo traffic grew by 9.8% year-on-year in October 2024, marking a fifteenth consecutive month of growth. But above all, while we have been seeing a slowdown in growth for several months, October marks a turning point. Traffic in October increased by 5.7% month-on-month in seasonally adjusted data, while it had declined in the previous two months. It amounts to about 24.1 billion tkm, according to our estimates.
Growth is still slightly stronger on international routes, as it remains above the 10% mark. The largest increase in traffic was recorded on the Middle East-Europe corridor (+15.3%), "marking 14 months of double-digit growth and 15 consecutive months of overall growth," IATA said. The disruptions to maritime transport in the Red Sea have probably encouraged a shift towards air transport on this route. A factor that also contributed to performance on the Europe-Asia corridor, with an increase of 14.3% year-on-year, marking the 20th consecutive month of growth, 11 of which were in double digits. Intra-Asia traffic also saw above-average growth, up 15% year-on-year. The largest market, Asia-North America, saw more moderate growth of 8.6%.
* CTK: cargo tonne-kilometres - Data source: IATA.
The momentum of demand is explained in particular by the start of the peak season, a few weeks before the end-of-year holidays, but also by the strike movement in the US ports on the East Coast and the Gulf of Mexico at the beginning of October. This movement ultimately lasted only 3 days, but the uncertainty over the outcome of the conflict prompted shippers to anticipate and redirect some maritime shipments to air freight.
This is reflected in the companies' contribution to growth. Asia-Pacific airlines, which hold a 33.3% share of the global air cargo market, remain the largest contributors. But their North American counterparts come in second, "for the first time since August 2023," IATA said. Of the industry's 9.8% annual growth, Asia-Pacific carriers contributed 46.1% and North American carriers 26%. European airlines contributed 16.6% and Middle Eastern airlines 6.4% over the same period.
- Annual cumulative total at the end of October 2024
Year-to-date at the end of October, air cargo demand growth stood at 12.2% compared to the first nine months of 2023 and at 13.1% on international routes.
* CTK: cargo tonne-kilometres - Data source: IATA.
- Capacity
Supply increased by 5.9% in October 2024 year-on-year, but contracted by 0.6% month-on-month after adjusting for seasonal variations. We estimate it at around 52.1 billion tonne-kilometres. On international routes, capacity growth was 7.2% year-on-year, with an 8.5% increase in available capacity in the belly-hold of passenger aircraft and a more modest increase of 5.6% for capacity of all-cargo aircraft.
The overall load factor stood at 47.3% in October and 52.9% internationally, representing respective increases of 1.7 and 1.5 percentage points year-on-year. In annual cumulative terms at the end of October, it increased by 0.2 points to 50.9% on international connections and by 1.7 points to 45.4% overall.
2/ Price trends
Against a backdrop of higher volume growth than supply, airlines can maintain high freight rates. Average unit revenue, including surcharges, increased again by 1.2% month-on-month and 10.6% year-on-year in October, a second consecutive month of double-digit increases. "As such the average freight rate in air cargo is 49% higher than the 2019 level,” indicates IATA.
As in September, the increase is all the more remarkable as it comes against a backdrop of a fall in the price of fuel compared to 2023. The price of kerosene is in fact down 25.7% compared to October 2023.
The increases are unevenly distributed. Prices on the Asia-Europe corridor are experiencing particularly spectacular growth, according to our Upply database. The strong performance of intra-Asian and Europe-Asia traffic is also reflected in the evolution of freight rates year-on-year.
Source: Upply Freight Index
3/ The outlook
The end of 2024 looks favourable for airlines. The momentum of e-commerce continues to fuel demand, particularly in this period leading up to the end-of-year holidays. On the other hand, the disruptive factors in containerised shipping have not diminished. In addition to these two recurring elements for several months, there is the prospect of a toughening of the trade war on a global scale, given Donald Trump's victory in the American presidential election. The president-elect has made no secret of his desire to significantly increase customs duties, especially on goods from China but also from the rest of the world, and to tackle this task in the first days of his term, which will begin on January 20. As a result, exporters are rushing to ship their goods early, reinforcing the traditional "peak season" effect.
Another factor in the evolution of trade with the United States is the possibility of a new strike in ports on its East Coast and in the Gulf of Mexico. Following the previous industrial action in October, the six-year agreement governing relations between handling companies and dockers was extended until 15 January. Negotiations have resumed but have not yet reached a conclusion. A new conflict from the second half of January cannot therefore be completely ruled out.
In the longer term, for the year 2025, growth looks promising again on the American market. “Our economists project the US will outperform expectations while the euro area lags behind amid fresh tariffs that are anticipated from the Trump administration,” Goldman Sachs said, in an article published on November 15. Specifically, the American bank estimates that U.S. GDP is expected to increase by 2.5 percent in 2025, well beyond the consensus of 1.9 percent of economists surveyed by Bloomberg. The eurozone economy is expected to grow by 0.8%, compared to a consensus of 1.2%. The United States will therefore be the driving force of the global economy, because developments in China are also causing concern. Consumer price inflation fell to 0.29% in October, suggesting an economic slowdown.
