Global economic concerns remained throughout the second half of the year, and will carry over into 2023 with some potential increases in demand around Chinese New Year.
"We expect demand to continue to underperform, particularly in Q1, but we are optimistic that by the end of Q2, as some recessionary concerns start to subside and supply chains on the Chinese Mainland normalise, we will start to see improvements," says George Edmunds, General Manager, Cargo Commercial, Cathay Pacific.
Outlining the five key takeaways from 2022, Edmunds mentions a difficult start to 2022 with the peak clearly underperforming against expectations, "especially compared to the once-in-a-lifetime peak we saw last year. That said, air cargo is still needed to meet seasonal demand, and this has ensured that while passenger belly capacity remains lower, particularly in our market, yields remain elevated in an historical context."
On capacity, Edmunds writes: "Another capacity factor comes from the number of older freighters that were reactivated due to the record rates and demand of 2020/21. Fuel prices are now above where they were in 2019, which means that a number of these older aircraft are becoming cash-negative as air cargo rates normalise, so we expect much of that capacity to permanently exit the market soon. According to a study we commissioned, 450 medium-sized to wide-body freighters could leave the market by 2030, and some possibly before."
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