Air travel boosts Cyprus transportation and storage sector

Cyprus’ transportation and storage sector experienced a substantial growth of 17.3 per cent during the second quarter of 2023, compared to the same period last year, according to a report released this week by the state’s statistical service.

The report noted that this surge was primarily the result of a notable increase in air transport, as indicated by the statistics which the service most recently revised.

According to the service, the Business Cycle Index for Transportation and Storage reached 154.4 units during the second quarter, with 2015 serving as the base year, showcasing a remarkable growth of 17.3 per cent, when compared to the corresponding quarter of 2022.

In addition, during the period of January to June 2023, the Business Cycle Index for Transportation and Storage exhibited an even greater annual increase of 22.3 per cent.

In comparison to the same quarter of the previous year, all specific economic activities within the sector recorded notable upticks.

What is more, according to the report, air transport, along with storage and supporting transport-related activities, experienced a surge of 16.9 per cent in the second quarter of 2023, compared to the same period last year.

Furthermore, postal and courier activities saw an increase of 12.5 per cent, while land transport and road haulage grew by 7.9 per cent. Water transport also saw growth, although more modest at 3.2 per cent.

These figures underscore the resilience and dynamism of the transportation and storage sector, which has demonstrated its capacity to adapt and expand, even in the face of complex economic conditions.

Meanwhile, the International Air Transport Association (IATA) recently released data for June 2023 global air cargo markets, showing the smallest year-on-year decrease in demand since February 2022.

“We remain hopeful that the difficult trading conditions for air cargo will moderate as inflation eases in major economies,” IATA Director General Willie Walsh said.

“This, in turn, could encourage the central banks to loosen the money supply, which could stimulate greater economic activity,” Walsh added.

Global demand, which is measured in cargo tonne-kilometers (CTKs), fell 3.4 per cent in June, compared to June 2022 (-3.7 per cent for international operations).

For the half year, demand slid 8.1 per cent compared to the January-June period of 2022 (-8.7 per cent for international operations).

However, demand in June was only 2.4 per cent below June 2019 levels (pre-pandemic).

Capacity, as measured by available cargo tonne-kilometers (ACTKs), rose 9.7 per cent compared to June 2022, which was a slower rate compared to the double-digit growth recorded between March and May.

This reflects strategic capacity adjustments airlines are making amid a weakened demand environment.

In addition, capacity for the first half of 2023 was up 9.9 per cent compared to a year ago. Capacity is now 3.7 per cent above June 2019 (pre-pandemic) levels.

During June, both the manufacturing output Purchasing Managers Index (PMI) and the new export orders PMI exhibited values below the pivotal threshold of 50, standing at 49.2 and 47.1, respectively.

These figures signify a contraction in worldwide manufacturing production and exports.

The global cross-border trade witnessed a decline of 2.4 per cent year-over-year in May, reflecting the prevailing subdued demand landscape and intricate macroeconomic circumstances.

Notably, the disparity between the annual growth rates of air cargo and global goods trade shrank to -2.6 percentage points in May, marking the narrowest margin since January 2022.

However, this gap still indicates that air cargo continues to grapple with a more pronounced downturn compared to container cargo, stemming from the deceleration in global trade.

According to IATA, European airlines encountered a 2.8 per cent reduction in cargo volumes during June 2023, in contrast to the corresponding month of the previous year.

This showcased an enhanced performance in comparison to May’s figures, which depicted a 6.6 per cent decline, partially attributed to the previously mentioned Europe-North America results. In terms of capacity, there was a 4.4 per cent increase in contrast to June 2022.

Finally, when evaluating the first six months of 2023, cargo demand saw a downturn of 10.2 per cent compared to the previous year, while the capacity for the same half-year interval experienced a rise of 2.5 per cent.