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Is air cargo recovery about to fizzle out?

[ November 4, 2020   //   ]

The global air cargo market maintained its slow, six-month road to recovery in October, according to October data from analysts CLIVE Data Services. However, the industry will be waiting cautiously to see if a sudden fall in demand in the last week of the month signals a new hiatus in consumer spending because of the second coronavirus wave.

Clive said there was a sustained improvement in volumes and rates, and a record ‘dynamic load factor’ – based on both the volume and weight perspectives of cargo flown and capacity available – of 72% in the week of 19-25 October. This further reduced the year-on-year decline in volumes to just -13% versus October 2019 from a peak of -37% at the start of Q2 2020. 

However, the 3% month-on-month growth in volumes for the last four weeks of October, and double-digit rate increases year-on-year, may start to level out if concerns over public health and job security result in closed consumer wallets and hence lower demand for air cargo capacity.

Clive managing director Niall van de Wouw, said some companies would be “looking over their shoulders” at the drop in demand and wondering if the recovery was about to be stopped in its tracks. He said: “We will know more once we see the November numbers but the 1.5% drop in the dynamic load factor in the usually strong last week of the month is unusual and raises question marks over demand in the coming weeks.”

Airlines are continuing to flex cargo capacity in accordance with demand – and to compensate for the dramatic loss of passenger traffic. Westbound capacity from China reflected this with a double-digit reduction in the last week of October, meaning capacity remained tight from China to Europe and, despite the 5% fall in volumes, prices remained high.

The International Air Transport Association (IATA) meanwhile said that, according to its rather older (September) figures,  cargo demand, while strengthening, remained depressed compared to 2019 levels.

Global demand, measured in cargo tonne-kilometers was 8% below previous-year levels in September (-9.9% for international operations). However, that was an improvement from the 12.1% year-on-year drop recorded in August. Month-on-month demand grew by 3.7% in September. 

Global capacity, measured in available cargo tonne-km (ACTKs), shrank by 25.2% in September (-28% for international operations) compared to the previous year. That is nearly three times larger than the contraction in demand, indicating a severe lack of capacity in the market.

North American and African carriers reported year-on-year gains in demand (+1.5% and +9.7% respectively), while all other regions remained in negative territory compared to a year earlier.

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