Q2 2023

SUPPLY

Quarterly overview of the major
developments in supply

Global cargo capacity nearly back to 2019 level Global air cargo capacity continued to recover in the second quarter, standing in June at only 2% below the same period in 2019. This is being driven by the recovery in passenger belly capacity, especially for the Northeast Asia region. Passenger belly capacity rose 17% year-on-year, to a level just below pre-pandemic one. Freighter capacity, on the other hand, only increased 1% year-on-year in Q2.Regional differences
In view of varying economic conditions across the globe, the market is seeing capacity in different regions recover at a differing pace. Since around half of global capacity comprises belly space on long-haul passenger flights, looking at international passenger travel data allows us to assess the recovery of belly capacity in different markets.

The US market has taken an impressive lead in international passenger travel, already surpassing pre-pandemic levels by June last year. The latest data from US Bureau of Transportation Statistics shows that the US international passenger numbers in March 2023 exceeded the 2019 average by 4%.Mainland China international passenger travel is lagging in comparison. Up until May, international passenger numbers only recovered to 32% of 2019 levels (Source: Civil Aviation Administration of China). But on the positive side, the May tally tripled the January level when China lifted international travel restrictions.The European market is proving to be a different beast altogether, with slow capacity recovery mainly because air connections with Asia have been dramatically disrupted due to the Russo-Ukrainian war and the closure of Russian airspace to ‘non-Russian-friendly’ nations. This has forced many airlines to reroute flights, adding extra transit time, increasing operating costs and making certain routes totally uneconomical.Overall, full normalization of the global freight market will require the remaining passenger belly capacity to recover. For the Asian market, or at least China, this will likely not happen until 2024.