US airfreight may decline in 2H 2022

U.S. airfreight import and export volumes are correlating with the manufacturing purchasing managers index (PMI).

While the U.S. manufacturing PMI has been in continual growth territory (i.e. above 50) for 25 months, momentum has decreased in recent months. Overall, U.S. air trade is up 12% for the first five months of this year but our forecast indicates moderate declines for the coming months with the fourth quarter of 2022 and the first quarters of 2023 likely to see more substantial declines in exports and moderate declines to lackluster growth on the import side.

The interactive dashboard below shows the development of manufacturing PMIs by country since January 2020. Clicking on an individual country will bring up country-specific developments. While continued PMI growth is expected in the third quarter, the index is forecast to moderate in Q4.

Figure 1 below shows an overview of the development of the U.S. PMI since 2014 plotted against air export and import growth. Both series move in sync rather than the PMI leading air freight growth.

Figure 1 - U.S. Manufacturing PMI vs Airfreight Export and Import Growth 2014 - May 2022

Figure 2 forecasts expected U.S. export and import volumes through Q2 2023. We expect June data to show a decline in exports and a moderate growth in imports when it becomes available in a few weeks' time and August data to exhibit a similar picture. For the rest of the year, we expect a moderate decline in imports and accelerating declines in exports. Figure 2 - U.S. Air Cargo Import and Exports Forecast Jun 2022 - Jun 2023

A number of key airfreight-relevant U.S. indicators have been performing well, but there are some signs of weakening: Retail sales for the first half of 2022 are up 9.2% year over year. While growth was slower in May, non-store growth, which mainly consists of e-commerce, was higher in June. The ISM manufacturing PMI has performed well for 25 months straight, but was down 3.1 points in June compared with May (53 vs 56.1). New orders declined in June. Industrial production is 4.2% higher than the same period last year and has been at similar levels for the three months ending June. However, we note the primary driver has been business equipment and construction, while consumer goods have underperformed. Changes to shipment and inventory ratios are often viewed as an indicator for airfreight. In principle this makes sense. When shipments grow faster than inventory levels — and inventory coverage decreases — then this leads to an increase in demand for airfreight. Our research indicates that the correlation between shipment to inventory ratios and U.S. airfreight is not particularly strong. Nevertheless, we have witnessed a buildup of inventory across most sectors since mid-2021, which would indicate less need for airfreight. Combined with the fact that the container shipping capacity and rate situation is starting to ease, it is likely that airfreight will come out of its "sugar high" sooner rather than later.

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Import and export activity could slow amid global manufacturing reduction

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Carriers report record cargo revenues

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