Dataset of the Month: Recovering Air Freight Volumes

Demand for European air freight remains up year-on-year following 17 months of decline, while European inventory values are down significantly.

What does the data tell us?

IATA data shows that demand for European air freight, represented by Cargo tonne kilometres (CTK), has been on the rise since October. This follows a 17-month period between April 2022 and August 2023 of negative year-on-year CTK growth in the European aviation market. At the same time, Eurostat data shows a significant fall in the value of European inventories. Q3 2023 data puts inventory values at just 4.6% of its peak level in Q2 2022.

What does this mean for European Logistics?

While it must be recognized that year-on-year CTK growth is being exaggerated by a base effect, it remains clear that demand is improving after being significantly weakened by a sustained onslaught from inflation in the previous 24 months.

When we couple this with low inventory levels, an improvement in European consumption activity in the coming months has the potential to increase the need for short-notice air freight to restock products. This, in turn, could significantly increase the demand-side pressure on the air freight market.

The potential effect on air freight rates remains unclear. The market continues to operate with a large surplus of supply, and this demand growth will coincide with growing capacity as Europe’s belly freight capacity grows from increased holiday travel as the days in Europe get longer and warmer. So capacity growth may soften any rate rises but should demand continue to increase post summer we may expect more upwards movement in rates later in the year. 


Author: Nathaniel Donaldson

Source: Ti Insights
Data Source: IATA

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