Close up view of wing and rear of a white, blue-and-red Delta jet with a blue sky and white clouds in the rear.

Delta Air Lines’ third-quarter cargo revenue was a microcosm of the cargo industry for 2023: trending down most the year and lower than last year’s rare record but still comfortably stronger than in 2019 — the benchmark for normalized economic times.

The Atlanta-based carrier on Thursday said cargo revenue in the September quarter was $240 million, up 27% from 2019. On a sequential basis, revenue from cargo operations was $32 million less than in the second quarter and $49 million below the first-quarter total. Year-over-year (y/y) cargo performance was down 8.4% for the third quarter. 

But for the first nine months of the year, Delta’s (NYSE: DAL) cargo revenue was 10% better than in 2021 and 41% improved than three years ago.

The third quarter usually is more lucrative than summers for airline cargo divisions. But the whole market has been gradually slowing from last year’s peak because inflation has curbed goods demand, and large companies preshipped goods far ahead of the holiday season to avoid potential supply chain bottlenecks. Global economic growth and trade has also slowed this year.

Also, cargo gains in 2020 and 2021, when flying capacity was sharply curtailed and economic dislocations boosted demand, were the result of significant increases in yield. With yields stabilizing this year, earlier revenue gains were mostly due to added cargo volume made possible by flying a more normal network schedule as international COVID-19 barriers came down. 

Airfreight volumes across the industry are down about 14% y/y, while spot rates are down an average of 10% to 20% as capacity has improved with the return to service of more international flights.

Slowing demand for goods out of China has caused trans-Pacific air cargo rates to drop 32% since September to $5.12 per kilogram — half the level of a year ago — while China-to-Europe rates fell 19% to $4.13/kg, 43% lower than last year, according to Freightos. Trans-Atlantic rates are more stable but 25% lower than a year ago as passenger capacity on the lane has increased.

Delta shines in Q3

Delta’s overall third-quarter performance suggested that travel demand didn’t tail off as expected, with the return to schools and office work. CEO Ed Bastian said the travel surge appears to be sustained and not a one-time, post-pandemic reaction. 

The airline posted record adjusted operating revenue of $12.8 billion, 3% higher than in 2019, and operating profit of $1.5 billion despite a $35 million hit from Hurricane Ian, record fuel prices and 17% lower passenger capacity than before the pandemic. Operating margin was 11.6%.

It was the second consecutive quarter of double-digit operating margins. Delta also offered positive guidance that fourth-quarter revenue would outpace 2019 levels, increasing profits. 

Domestic passenger revenue was 2% higher and international passenger revenue was 97% recovered compared to the same 2019 period. International unit revenue growth outpaced domestic for the first time since the pandemic.

The U.S. Department of Transportation two weeks ago approved the joint venture between Delta and Latam, a large South American carrier. The deeper cooperation enabled by the agreement is expected to produce benefits for shippers in terms of expanded network connectivity and efficiency through shared trucking and warehousing.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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