Entering 2024, the air cargo industry faces uncertain demand alongside continued capacity growth driven by passenger travel. But carriers and forwarders will continue the shift toward digital channels to improve efficiency, especially in a down market.
The decline in spending on goods since mid-2022 — together with falling ocean rates pushing some volumes to ocean — has meant that despite gradual increases in air cargo demand since the start of 2023, air cargo volumes still remain slightly below 2019 levels.
Nonetheless, there is some optimism about continued demand recovery in 2024, and with it the return of seasonality and moderate growth relative to 2019. This rebound is, of course, dependent on economic recovery in Europe and the US economy’s ability to steer clear of a recession, neither of which are certainties.
Passenger travel recovery has meant that cargo capacity has already surpassed 2019 levels even as volumes lag, pushing rates way down from 2022 levels. But the Freightos Air Index shows that for China–US trade, and China–Europe to a lesser degree, yields remain above pre-pandemic levels, probably reflecting higher fuel and labor costs but also some increases in volumes as of late in the third quarter.
As always, industry performance will depend mostly on macroeconomic drivers of demand. But on the individual carrier and forwarder level, we see promising strategies like shifts to a focus on shipment segments that can be booked at higher rates and margins, and the leveraging of digital tools to improve performance in terms of revenue and booking volumes.
Digitalization is alive and well. Even as industry volumes fell, digital transactions on the Freightos eBooking platform climbed. The 269,000 transactions in the third quarter of 2023 marked the 15th consecutive record quarter for the platform, up more than 40% from a year prior.
Strong eBooking growth even as the industry contracts reflects the strong value proposition of digital channels. It shows many carriers and forwarders are looking toward digital air cargo to extend their reach, improve efficiency and provide better transparency for their customers, especially as market conditions change.