Pierre Van Der Stichele, Vice President of the Global Cargo division for Air Partner, discusses the outlook for recovery as the effects of the pandemic are managed and global inflation begins to ease.

The essential role that air cargo plays in global trade makes the industry particularly susceptible to the highs and lows of the global economy. Wider macro factors produce fluctuations or plateaus of supply and demand – factors which have been turbulent and unabating over the past few years. In fact, due to considerable upheaval caused by the Covid-19 pandemic and the ongoing Russia-Ukraine war, forecasting for the future is currently the most challenging it has been for nearly 30 years.

The Covid-19 pandemic has been one of the most striking illustrations of how global macro factors can have a profound impact on the industry and how it has had to rapidly evolve to survive. The pandemic led to an unexpected and unprecedented boom in air cargo demand, most predominately for medical supplies, equipment and e-commerce.

Across the industry, many airlines responded by ordering new planes to meet the surge in demand, as well as implementing conversion programmes of existing passenger aircraft to transform into freight planes. Although necessary during the peak of the pandemic, now that it is being managed and the economy is slowing down, the opposite effect is being seen. Many of these airlines are trying to delay their aircraft conversion programs or defer delivery of aircraft as the numbers no longer add up with the current demand. On the one hand, the financial penalties of doing so can be detrimental to a business, on the other hand, the industry will be better equipped next time there is a global media emergency.

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Meanwhile, the ongoing Russia-Ukraine war, increased energy costs and high inflation has caused a high number of freight forwarding businesses to flatline in the wake of decreased consumer spending. In the third quarter of 2022, we didn’t see a peak in cargo operations which was highly unusual.

Most recently, the conflict in Sudan has seen the closure of Khartoum airport which was heavily relied on as a tech fuel stop for European and Middle Eastern flights to Southern Africa. Furthermore, the impact caused by the closure of the vast Sudan airspace is creating additional complications with avoidance and long flight times. The impact on cargo is yet to be seen but the issue will not be solved overnight.

But the outlook for airfreight is not all doom and gloom. As we saw with the pandemic, changes to demand and supply go through peaks and troughs and this downturn is not going to last forever. The IATA recently released a report showing that February 2023 air cargo demand rose 2.9% above pre-pandemic levels suggesting the beginning of a revival.

When we look at the current macro factors driving this increase, the dismantling of China’s Covid lockdown restrictions in January 2023 is a significant cause. As one of the world’s largest exporters and importers, the surge for goods and services – both to and from China – is going to increase the need for airfreight. This is a positive direction for the industry and as global inflation begins to ease, it is likely that demand will recover, albeit slow and steady.

For those in the industry to survive to see the resumption of steady demand, swift adaption to the evolving macroclimate has proven essential. This involves staying abreast of industry trends, seeking expert advice where necessary and diversifying investments to ensure success.

About the author:

Pierre Van Der Stichele is the Vice President of the Global Cargo division for Air Partner Group, a Wheels Up company. He has extensive experience within the aviation sector in a range of senior roles, with more than 28 years’ experience in the air cargo industry.

Van Der Stichele has arranged a variety of complex global cargo charters, air bridge operations for humanitarian missions and provided support for the industrial and military sectors. His knowledge of the aviation industry is built upon a career with time spent at Evergreen International Airlines, Antonov Airline, Southern Air Transport Inc and Northwest Airlines.