The industry needs staying power
GSSA expects airfreight upturn in Q2 or H2. After a peak season that didn’t deserve the moniker the air cargo industry is now looking to the future with uncertainty. Andrius Antanaitis, director of business development for Europe at Strike Aviation, thinks the industry will have to weather a bumpy start to the year. He has no great fear of a long-lasting crisis, however. Tiaca expects demand for airfreight shipments to return as consumption patterns improve.
The year 2022 started furiously and ended unusually, according to Andrius Antanaitis, who summarised it with this assessment. “While the beginning of 2022 saw records broken, there were major economic shocks, such as the war in Ukraine and the energy crisis, that had serious implications for global markets.”
In addition “there were already significant changes in the market during the Covid-19 pandemic,” Antanaitis continued, “but 2022 brought even more unexpected challenges. The whole year was difficult, and at the end of it, the air cargo sector sort of had to put the brakes on.”
2023 – slowdown but no major crisis
The Lithuanian national, who has worked for Strike Aviation, since 2009, cited the biggest hurdles – namely longer routes between Europe and Asia, arising from the closure of Russian airspace; delays in lifting Covid-19 restrictions in several markets, especially China; and the parity between the euro and the US dollar, which was unfavourable for the industry.
Strike itself, a GSSA that has activities worldwide, saw its revenues for December 2022 fall 30% below the figure for the same month of the previous year. The decline was bearable, however, as revenues had grown by about 20% in the course of the year, partly due to the increase in prices caused by inflation. The total volume of cargo Strike Aviation transported last year was similar to previous years.
Although a slowdown is expected in the air cargo sector at the beginning of 2023, Antanaitis does not predict a major crisis. “Although freight growth is slowing down, if overall freight remains consistent, we’ll be able to balance business processes,” the manager said.
With this in mind, Strike is counting on contracts such as an important agreement signed with the US cargo carrier Amerijet International in November. “This partnership will allow Strike to amortise some of its losses in Europe in other directions.” In addition, Strike’s German division has begun freighter flights from Belgium to India, “which is a promising new niche,” Antanaitis believes.
Industry in a good state, structurally
Furthermore, Antanaitis expressed his hope that at the beginning of next year, it will be possible to control inflationary processes in Europe, which largely impact pricing decisions in business. “Positive changes are expected in the market in the second quarter of 2023, provided there are no unforeseen major economic issues.” In any case, Strike is “quite well prepared” for this slowdown.
Meanwhile, The International Air Cargo Association Tiaca expects a revival in demand to have a positive impact on the industry in the second half of the year. High inflation, interest rates and energy costs, as well as concerns about job security, have all prompted players to exercise restraint and reduced the overall scope for spending, as Tiaca reported in its ‘Air Cargo Outlook 2023’.
“However, the situation is temporary,” says the association, which believes that “structurally, the industry is in a good state.” It thus expects demand to pick up in H2 of this year.