Air cargo demand is still seeing a bump from 2023 levels, with the industry experiencing double-digit year-over-year growth for the third consecutive month. In February, total demand increased 11.9 percent to 19.7 billion cargo tonne-kilometers (CTKs), according to data from the International Air Transport Association (IATA).

The growth occurred even after accounting for seasonally reduced activity in the Asia Pacific region after the Lunar New Year, which lasted from Feb. 10-24. February demand figures also got a bit of a boost since 2024 was a leap year, giving the month one extra day compared to February 2023, which slightly exaggerates annual growth rates to the positive.

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International routes saw the brunt of the pronounced air cargo demand at a 12.4 percent growth pace. The IATA explained in its monthly report that the growing demand reflects this “buoyant” international traffic, which benefits from booming e-commerce.

To a lesser extent, the report also attributed the growth to the current concerns experienced in the Red Sea, notably “a recently increased interest in sea-air services because of the ongoing capacity constraints in maritime shipping, among other factors.”

On the other hand, North American airlines are significantly lagging their global counterparts with a 3.2 percent uptick. North American air cargo demand declined precipitously month over month, dropping from its 14.1 percent annual gain in January.

While demand on the North America-to-Europe trade lane grew by 5.2 percent year-over-year, up from the 1.9 percent growth seen in January, Asia-to-North America grew by just 3.9 percent annually—a steep decline from January’s 17.1 percent increase.

The North American air cargo market saw a major domestic shakeup that seems to align with the slow growth, with UPS entering a new contract to be the new air cargo carrier of the United States Postal Service (USPS), replacing FedEx. The USPS reduced volume shipped by air by 90 percent over the two years prior to August 2023, contributing a top-line hit at FedEx’s Express delivery unit.

On a global scale, cumulative CTKs for the first two months of 2024 have registered a total of 40.5 billion, up 15 percent from the 2023 value and only 0.3 percent below the heights experienced in early 2022.

Willie Walsh, IATA’s director general, said February’s demand growth far outpaced the 0.9 percent expansion in cross-border trade experienced the month prior, citing data from the World Trade Monitor published by the Netherlands Bureau for Economic Policy Analysis.

“This strong start for 2024 could see demand surpass the exceptionally high levels of early 2022,” Walsh said. “It also shows air cargo’s strong resilience in the face of continuing political and economic uncertainties.”

In line with the increasing demand, measured in available cargo tonne-kilometers (ACTKs), global cargo capacity increased by 13.4 percent compared to February 2023. Capacity is up even further at 20.2 percent on a two-year basis, according to the IATA.

Much of the annual growth in industry ACTKs continues to come from the strong return in international passenger belly-hold capacity, which registered an outstanding 29.5 percent annual increase in February. By comparison, international cargo capacity for dedicated freighters rose by 3.2 percent year over year.

Despite many of the concerns that were had about rising freight rates in the wake of the Red Sea crisis, forcing container ships to continue rerouting around southern Africa, the capacity constraints on the ocean are having “no visible impact” on air cargo rates, according to the IATA report.

Specifically, global air cargo yields (including surcharges) are plummeting again on a yearly basis. While they registered just a 1.1 percent month-over-month reduction in February, the numbers represent a stark 18.3 percent drop from February 2023 totals.

“This decline materialized despite a simultaneous rise in jet fuel prices, which increased by 3.1 percent month-over-month in February, closing at $112.1 per barrel,” the IATA report said. “Similarly, the Red Sea shipping crisis and the related sharp decrease in relative air cargo rates over container shipping continued to fail to produce significant upward pressure on the industry-average monthly yield for air cargo.”

Freight rate benchmarking platform Xeneta backed up the data shared by the IATA, saying that air cargo spot rates declined 14 percent year over year in February to $2.29 per kg. When it came to the trans-Atlantic trade lane, Xeneta noted that the average general cargo spot rate on this corridor fell by a sharp 27 percent in February, ending at $1.82 per kg.

In January, the IATA forecast an approximately 20 percent year-over-year declines in global air cargo pricing.

Cargo load factors (CLF), the percentage of actual available freight tonne-kilometers, dropped by 0.6 percentage points month-over-month to 45.1 percent, likely influenced by slowing activity in the Asia Pacific region after the Lunar New Year. Slowing cargo load factors can be detrimental to airlines, as they can represent a potential imbalance in supply and demand and thus, a hit to revenue and profitability.