News / Cargo can deliver airlines a 'strategic advantage', WCS delegates told

Air freight rates were more competitive in January, relative to other modes, than since the pandemic, according to IATA’s chief economist, Marie Owens Thomsen.

And air cargo is “capturing market share in the trade space”, she added, particularly on Far East to North America lanes.

“Growth in air cargo traffic has outpaced merchandise trade,” she said.

However, there were few positives in her outlook to delegates at IATA’s WCS in Hong Kong today.

“Fuel prices and the crack spread remain high. Jet fuel is significantly higher than the price of Brent crude, and there are few signs of it going lower, because of the structural lack of refining capacity,” she explained.

“The geopolitical environment has stimulated the world to pump more oil than ever before. Attention has turned to energy security, rather than combating climate change.”

Meanwhile, a “very strong” US dollar has impacted most airlines.

“The rest of the world suffers, and the airlines which pay for fuel in dollars,” said Ms Thomsen.

And although airlines are back to profitability, the margins are low, she added. Profit per passenger was just $5.40 last year, expected to rise to $5.50 this year.

“That’s clearly not enough to make the industry robust. But one way of increasing robustness, we’ve discovered, is cargo. It’s a strategic advantage.”

One positive she noted was the global GDP of 3%, “a remarkable performance”. She added: “The recession did not materialise, in large part because … unemployment rates are at, or near, historic lows.

“But inflation has spiked. It has come down, but in the US it is one point above where the Fed would want it. Borrowing costs have risen, and are likely to rise further. That’s a drag on growth.”

Ms Thomsen also noted there were elections this year for 4.2bn people – who account for 70% of global GDP.

“Elections can produce unexpected outcomes and big turnarounds in policy,” she explained.

“We tend to prefer a predictable environment in business.”