International air express, air freight and containerised ocean freight do not always move in sync – even though growth in all three is correlated to changes in economic activity. Part of this is due to how quickly each responds to changes in the inventory cycle or relative price differences, but also the underlying industry segments and customer profile that driven each segment. Consumer demand has performed better (or less worse) than manufacturing activity and as such containerised shipping and express have performed better than general airfreight. Air cargo traffic – which consists of a mix of express, cross border e-commerce and general air freight – has been strong, primarily because of e-commerce.
Trade Data Service
After two bad years of declining international air cargo volumes, we should be in for a good year – possibly somewhere in the order of 10% growth based on our latest forecast. For context, that would put us somewhere close to where we were at the end of 2021. Should we believe our own numbers? If cross border e-commerce traffic remains strong, manufacturing recovers and the outlook for global growth continues to improve then it is likely that we also see a recovery in air cargo traffic. The ongoing situation in the Red Sea forcing longer routings between Asia and Europe is also likely to increase the demand for air (and rail) freight on that lane.
Recent EU survey data does not point to an immediate recovery nor further deterioration of trade relevant economic activity. Manufacturing activity continues to be weak, but overall retail sales development has been somewhat positive. Several indicators are looking positive for Southern Europe, which could lead a recovery of economic activity. This article includes an interactive dashboard with key economic and employment sentiment indexes, confidence indicators and industry and retail data for the 27 EU Member States and Türkiye.
Global semiconductor sales dropped about 8% in 2023 but are expected to recover in 2024. As integrated circuits are found in most key products, this underlines the likelihood of a recovery of world trade in 2024. However, trade flows are likely to change over the coming years as China, the US and Europe build up own capacity and support the development of new fabs in South and Southeast Asia. Machinery trade indicates an emerging shift away from Taiwan and Korea based production of integrated chip production.
Global trade growth expectations have been successively downgraded over the past twelve months and year end 2023 numbers are likely to come out at about around 1%, according to December estimates prepared by the OECD. Long haul trade may even be solidly negative based on what we have been seeing for key trade generators such as China, the European Union, and the United States. Trade growth can only pick up if manufacturing activity does the same. The bulk of world trade consists in the movement of industrial inputs, intermediate and capital goods. As such global trade and industrial production are directly linked. Manufacturing has been weak all throughout 2023, but an improvement could take place in the second and third quarter of 2024.
The last twelve months have seen a large increase in cross-border e-commerce traffic, primarily driven by China which has increased its share as the main origin of shipments. Chinese cross-border e-commerce growth in turn appears to have been largely driven two platforms, Temu and Shein, which together with the various Alibaba Group marketplaces and Amazon account for the bulk of international volumes. We estimate that Chinese cross border e-commerce trade grew by almost 30% last year and accounted for over 8% of the value of Chinese international trade.
The decline in US air trade with China is being compensated by cross border e-commerce. After declining 11% in 2022, cross border e-commerce volumes have grown 55% in 2023 and are now 38% higher than in 2021. This increase is evident in South China and Hong Kong air cargo traffic into the US.
Chinese cargo traffic data indicates an e-commerce driven surge in year-end air freight volumes not reflected in trade data. Due to value reporting thresholds trade data does a poor job of tracking cross border e-commerce volumes which by some accounts could account for a fifth of international air cargo volumes. Chinese international air cargo shows strong growth over the last three months.
This week the IMF published its 6 monthly world economic outlook and associated databases. Compared to the April 2023 version, the outlook for trade in 2023 has deteriorated. The current expectation for 2023 goods imports is a decline of 0.5% rather than growth of 1.6%. At a country level, the picture is mixed – with some countries showing an upgrade and others a downgrade of their previous outlook. This article focuses both on the overall outlook as well as where changes have occurred.
The Philippines accounts for about 18% of Southeast Asia’s population and about 12% of its economic output. The Philippines and with Indonesia and Vietnam are expected to be within the top three performers in the region in terms of economic growth, imports and exports. Philippine import and export performance has been disappointing this year, but after a weak first quarter volumes have been picking up since the middle of the year. Indicators point towards further strength.