Bust-to-boom-to-bust: the cyclicality of air cargo growth patterns

The global air freight market has been in positive growth territory for about one year now, with IATA reporting positive traffic gains since August 2023, as well as seven consecutive months of double-digit industry growth, from December 2023 through June 2024 (and early reports for July 2024 show ongoing strong growth). Most industry pundits are expecting a very strong peak season in latter Q3/early 4Q 24.

It is helpful to bear in mind that neither growth nor contractionary periods in air cargo traffic last for ever. So, just how long do air freight traffic boom-to-bust cycles last? This article will examine the monthly air cargo traffic (as measured in “cargo tonne-km,” or “CTK,”), which specifically means all air cargo traffic moved by both passenger and freighter aircraft since the 2008/2009 time-frame.  In short, the average growth or declining period in air cargo traffic has lasted about 19 months since 2008.

The IATA Monthly Statistics dataset provides good detail of airline air cargo activity dating back to 2010, which was a “recovery year” for air cargo (and all freight transport modes) after the “global financial crisis” (GFC) of 2008/2009. Keeping in mind that the air cargo industry has only been documented numerically for the past 60 or so years (and it is still quite small even by air transport standards at the present time), the monthly records of the past 15 years do provide a rough-order guide as to the duration of boom and bust cycles.

There have been 10 distinct growth phases of the air cargo industry since the latter half of 2008.  During that time, the industry underwent five growth periods (including the one currently under way), four contractionary periods and one stagnation period.  To be completely clear, this statistical sample is too small to draw any definitive and/or “bankable” conclusions, but this relatively recent history is all that we have to provide a guide as to what may happen in the near-term, or, for analysis’ sake, the next five years.

Starting with the pessimistic news, there have been four periods of “negative air cargo growth” since 2008, namely August 2008 to October 2009, July 2015 to March 2016, November 2018 to December 2020 and March 2022 to July 2023.  Each contractionary period has its own unique causal factors: the 2008-2009 timeframe was a result of GFC, the 2015-2016 period was due to the collapse in commodity prices in latter 2014 (particularly oil and gas), the 2018 to 2020 downturn was due to the automotive manufacturing slowdown in 2018/2019 (and followed by Covid), and the 2022-2023 fall was due to the retreat from the Covid-era e-commerce surge and the normalisation of containership/supply chain networks.

But the stagnation period of May 2011 to September 2013 is particularly important, in that this 29-month period of air cargo traffic doldrums shaped the mindset of observers and airline executives everywhere.  This period of no-or-relatively little growth shaped decision-maker thinking throughout the industry into believing that: 1) air cargo was of little influence in overall supply chain strategy; 2) passenger lower hold (belly) capacity could handle the majority of air cargo growth for the foreseeable future; and 3) capital investment in freighters – particularly large widebody freighters (those dedicated freighters capable of carrying 80 tonnes of payload or more) was not needed.

One need only examine the large widebody freighter investment strategy of UPS Airlines, which saw almost no growth between 2011 and 2017 (which grew from 51 to 53 units over those seven years) as reflective of how negative/stagnant air cargo traffic influenced corporate capital investment during this time. Several other airlines also curbed large widebody freighter investment during this time.

The five distinct growth periods, of November 2009 to April 2011, October 2013 to June 2015, April 2016 to October 2018, January 2021 to February 2022  and August 2023 to the present, are also equally illustrative. These five growth periods average about 19 months in duration, but this average length may be due to the current expansion period, which has been driven by Chinese e-commerce exports and sea-air conversion traffic due to Red Sea containership traffic disruptions.

Please bear in mind that these observations are most decidedly neither scientific or statistically defensible.  However, they do provide limited-but-cautionary guidance as to the relative duration of any expansionary or contractionary air cargo traffic period in the near future.