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News Article

Air Cargo Demand Hit by Inflation, Fuel Prices

By Sofía Hanna | Thu, 08/04/2022 - 17:01

Worldwide air cargo movement showed a 6.4 percent decrease in June 2022 compared to last year, according to the International Air Transport Association (IATA). If inflation continues growing at this rate, the sector will suffer substantial repercussions, warned the association. In Mexico, cargo operators are also adapting their strategies to adapt to the new Felipe Ángeles International Airport (AIFA), which might increase costs. The price of turbosine, the most commonly used fuel in aviation, grew faster in Latin America than in other regions of the world. 

 

Globally, inflation is at its highest levels in decades, leading banks to raise interest rates. This has resulted in higher prices for consumers, in turn reducing consumer spending. This chain of reduced spending and rising interest rates are expected to be one of the most critical factors to impact air cargo demand. Trading activity increased slightly in June 2022 due to reduced blockages in China and stronger trading volumes in emerging regions such as Latin America and Africa. However, in June 2022, global demand measured in cargo ton-kilometers (TCKs) was 6.4 percent below the same month in 2021, while capacity was 6.7 percent higher year-on-year, reports IATA.

 

"Air cargo demand during the first half of 2022 was 2.2 percent above 2019 levels. That is a good performance, particularly considering ongoing supply chain constraints and capacity loss due to the war in Ukraine. Current economic uncertainties have had little impact, but developments will need to be monitored closely in the second half," said Willie Walsh, Director General, IATA. 

 

The war in Ukraine continues to affect the cargo capacity used to serve the EU, as several airlines based in Russia and Ukraine were key players in cargo. New export orders, a leading indicator of global cargo demand and trade, have declined in all markets except China.

 

Mexico is facing its own problems in cargo management, starting with the new coordination table in charge of improving aviation in Mexico. This group announced in May that domestic cargo and charter operations would have to migrate from Mexico City International Airport (AICM) to AIFA. When the announcement was made, the sector warned that this decision would threaten various business models based on sustainability and budget efficiency.

 

The rise in fuel prices, which has been a direct consequence of the Ukraine-Russia war and inflation, has become a new concern for the aerospace and air cargo sectors, given that the price of jet fuel reached US$4.2 per gallon globally. In Latin America, fuel prices reached their highest point at US$4.4 per gallon, according to the Platts global index of S&P Global, as of June 7, 2022. 

 

The data used in this article was sourced from:  
IATA, MBN, S&P
Photo by:   David Preston, Unsplash
Sofía Hanna Sofía Hanna Journalist and Industry Analyst