Capacity is up but demand remains depressed, says DHL


Demand remains low with minimal growth while global capacity has increased by 12% year on year, said DHL Global Forwarding in its Air Freight – State of the Industry report for August.

While only a ‘conservative’ increase in volume demand is expected in the 2023 late-year peak season, most airlines have capacity at hand.

Rising demand for passenger travel has boosted the number of flights and has increased belly-hold capacity by around 19%, year on year.

DHL sees scheduled carrier capacity as likely to be up 9% in the third quarter of 2023 compared with the second quarter, and by 18% compared with the first quarter. Capacity remains sufficient on most trade lanes.

However, retirements of freighters on the transpacific routes are bringing capacity “one step closer towards right-sizing”.

Meanwhile, high global inventories, inflation and lower purchasing power are both keeping demand in check, it said.

However, the report continues, some of the major world economies are expected to recover towards the fourth quarter of the year which is likely to increase consumer purchasing power and improve airfreight volumes. From mid-October, demand is expected to increase by 3% compared to the same period last year.

The report said that manufacturing output fluctuated in August, reflecting flat demand growth, but e-commerce volume continued to pick up compared to previous months. There was also higher demand in sectors such as automotive, technology and healthcare.

Capacity utilization is likely to remain balanced as long as the current demand versus capacity scenario continues.

Rates did increase slightly month-on-month, across all regions, as carriers anticipate an upturn in demand in the fourth quarter of the year. They are likely to remain stable in the long term, the report predicts, subject to seasonal fluctuations.

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One factor that is keeping rates comparatively high is increased fuel prices, and these are expected to remain so long as global oil inventories are low.

Looking ahead, the report sees sufficient capacity as demand for passenger travel is expected to increase. However, planned permanent removals of freighters from the global fleet, together with temporary absences for maintenance checks will balance currently high capacity against low demand.  Long-term rates will be stable as the market “has most likely bottomed out”, the report concludes.

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Devender was born in the year when the Beatles Group was formed. He holds two master’s degrees in English Literature and Public Administration. He also has an Honors degree in English Literature and a post-graduate diploma in Corporate Communications and Public Relations. He was closely associated with the Indian State Transport Undertakings and Ministry of Transport in his role as Corporate Communications and PR specialist for over two decades handling domestic and international organizations. He ventured into business forming his own Media House, Profiles Media Network Private Limited which is now a twenty years old company. Excelling as an editor, Marketing, PR, Anchor, and Advertising specialist, he is now expertly navigating the world of social media. A widely traveled professional internationally, Devender has a deep understanding of the Air Cargo, Cargo Business, Cargo Airports, Freighters and Cargo Industry at large.


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