Global Air Cargo Demand Continues to Improve

(07 Dec 2020)
IATA’s global air freight
market data for October 2020 shows that demand continued to improve but at
a slower pace than in September, and remains below previous
year levels.

Global demand, measured in cargo tonne-kilometers (CTKs), was 6.2% below previous-year levels in
October (-7.5% for international operations). That is an
improvement from the 7.8% year-on-year drop recorded in September.
However, the pace of recovery in October was slower than in
September, with month-on-month demand growing 4.1% (1.1% for
international).

Global capacity, measured in available cargo tonne-kilometers (ACTKs), shrank by 22.6% in October (24.8% for international operations) compared to the previous year. That is
nearly four times larger than the contraction in demand,
indicating the continuing and severe capacity crunch.


CargoLogicAir Boeing 747-400ERF reg: G-CLBA. Picture by Steven Howard of TravelNewsAsia.com Click to enlarge.

Strong
regional variations continue with North American and African
carriers reporting year-on-year gains in demand (+6.2% and +2.2%
respectively), while all other regions remained in negative
territory compared to a year earlier.

Improving performance is aligned with improvements in key economic indicators.
The new export orders component of the manufacturing Purchasing
Managers’ Index (PMI) stayed above the 50-mark for the second
month in a row. Results above 50 indicate economic growth. This a
significant development as the PMI had been in negative growth
territory from mid-2018 through to August 2020.

Global goods trade continued to trend upwards in
recent months, according to the World Trade Organization. The
uptick will not be sufficient to avoid a full-year decline of 9.2%
compared to 2019. Much of this ground, however, will be regained
in 2021 with an expectation of 7.2% annual growth.

The Global Composite PMI which reflects
changes in global output, employment, new business, backlogs and
prices, indicates that economic recovery will continue in Q4/2020
despite a resurgence of the COVID19 virus in many markets.

“Demand for air cargo is coming back a trend we
see continuing into the fourth quarter,” said Alexandre de Juniac, IATA’s Director General and
CEO. “The biggest problem for air cargo is the lack of capacity as
much of the passenger fleet remains grounded. The end of the year
is always peak season for air cargo. That will likely be
exaggerated with shoppers relying on e-commerce-80% of which is
delivered by air. So the capacity crunch from the grounded
aircraft will hit particularly hard in the closing months of 2020.
And the situation will become even more critical as we search for
capacity for the impending vaccine deliveries.”

Asia-Pacific airlines saw demand for international air cargo fall
11.6% in October 2020 compared to the same month a year earlier.
This was an improvement from the 14.6% fall in September 2020 and
the second consecutive month of improvement. International
capacity remained constrained in the region, down 28.7%. However,
this was an improvement over the 31.8% fall in capacity the
previous month. The region’s airlines reported the highest
international load factor indicating a solid appetite for air
cargo services.

North American carriers posted a
1.3% increase in international demand in October compared to the
previous year-the second month of growth in 10 months. This strong
performance compared to the rest of the industry was driven by the
Asia-North America routes, reflecting rising e-commerce demand for
products manufactured in Asia and smaller capacity declines than
other regions. The region’s domestic market decelerated slightly from September but remained robust. International capacity
decreased by 16.6%.

European carriers reported a
decrease in demand of 11.9% in October compared to the previous
year. This was an improvement from the 15.6% fall in September
2020. Air cargo in the region has been largely unaffected by the
resurgence of the COVID-19 virus. International capacity decreased
28% an improvement from the 32.6% fall the previous month.

Middle Eastern carriers reported a decline of 1.9% in
year-on-year international cargo volumes in October, unchanged
from September. However, the pace of recovery in October was
slower than in September with month-on-month demand, improving
6.0% and 2.5% respectively. The weaker performance is driven by
less demand in Africa-Middle East trade lanes. International
capacity decreased by 22.7%.

Latin American
carriers reported a decline of 12.5% in international cargo
volumes in October compared to the previous year. This was a
significant improvement from the 22.2% fall in September 2020. The
pace of month-on-month recovery was the strongest of all regions
in October with demand climbing by 4%. The region’s improved
year-on-year performance can be partly attributed to weak growth
in the same period last year. However, improving operating
conditions in a few key markets including Brazil and recovering
cargo capacity also contributed. International capacity decreased
29.1% compared with up from 32.1% in September.

African airlines saw demand increase by 2.8% year-on-year in
October. This was lower than the 12.1% growth in September.
Despite this the region still posted the strongest increase in
international demand. The slight weakening in performance can be
attributed to a slowdown in the Asia-Africa market where demand decelerated by 19 percentage points year-on-year. International
capacity decreased by 20.8%.

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