Air freight demand begins to wane amid global economic shocks

The strong cargo demand that helped passenger-deprived airlines stay afloat during the pandemic is showing signs of softening amid growing economic uncertainty, in part, fuelled by decades high inflation. A potential weakening of the air freight market coincides with growing concern in the aviation industry that surging passenger traffic, which has reduced airlines' reliance on cargo revenue, may be fleeting. The Baltic Air Freight Index , which shows weekly transactional rates for general cargo fell 8.7% last week, while the airlines group IATA said on Monday that freight revenue generated by carriers this year would fall by 6.4%. Qatar Airways' CE Akbar Al Bakar warned on Monday that inflation was expected to weaken demand for air freight and subsequently put downward pressure on yields. "There will be a downturn in business (activity) and when there is a downturn in business, people don't buy stuff that we normally carry as cargo," he told reporters at an industry meeting in Doha.<br/>Edward Bell, an economist at Dubai lender Emirates, described consumers and corporates as facing a "kind of vortex of price pressures" that they would increasingly be sensitive to over the rest of the year. Korean Air CE Walter Cho said freight rates had softened but were far higher than they were before the pandemic, when there was much more capacity. "Demand is weak especially since China is basically shut down right now. We expect it to come back soon. I expect the cargo market to be sustainable until next year at least.”<br/>