Air cargo industry expects strong growth the coming months
Global air cargo traffic was weaker than expected in July, but new export orders indicate strong sector growth for the remainder of the year, the International Air Transport Association said Monday.
Anticipation that airfreight bookings will take off again during the next few weeks is echoed by logistics specialists who see heavy ongoing demand for COVID-19 protective equipment, retailers building up holiday inventories during the traditional peak shipping season and major device releases from the likes of Apple, Samsung and Sony.
Air cargo volume showed modest improvement in July compared to June, but remained far below the level in 2019, according to IATA.
The trade association said cargo demand fell 13.5% from July 2019 as the global struggles to recover from the pandemic, but the activity was better than June’s 16.6% year-over-year decline. International trade by air, which involves larger aircraft, was down 15.5% from last year.
Belly capacity sinks with 70% due to passenger flights reduction
IATA said it changed the way it measures volume to cargo-ton-kilometers from freight-ton-kilometers to reflect the fact that volumes include mail.
Capacity was still about a third less (31.2%) than a year ago, compared to a 33.4% reduction in June. IATA’s monthly report showed that belly capacity in July contracted by 70.5% because most passenger operations remain sidelined. A 29% increase in freighter utilization did little to ease the space shortage.
Airlines have been gradually adding widebody flights as border restrictions recede, but the widebody fleet was still 42% below last year’s level in July.
Economic indicators are pointing to greater growth in airfreight volume in the 2020 homestretch.
Manufacturing output, as measured by the Purchasing Managers Index, increased in July, including in key economies such as China, Germany and the U.S. New export orders rose by 3.5 points compared to June, and were up nearly 20 points since April.
Air cargo abilities challenged by global economy
IATA analysts say the supply constraints likely kept air cargo volumes from growing in line with economic output.
“Economic indicators are improving, but we have not yet seen that fully reflected in growing air cargo shipments,”said IATA Director General Alexandre de Juniac in a statement. “That said, air cargo is much stronger than the passenger side of the business. And one of our biggest challenges remains accommodating demand with severely reduced capacity.
If borders remain closed, travel curtailed and passenger fleets grounded, the ability of air cargo to keep the global economy moving will be challenged.”
North America once again was the strongest region for air cargo, suffering a 5.4% drop in international demand from July 2019 compared to double-digit drops for airlines in other parts of the world.
European carriers, for example, experienced a 22.4% annual drop in international cargo volumes. The Asia-North America trade lane has held up better during the COVID downturn because of strong e-commerce orders and demand for personal protective equipment.
Industry-wide load factors increased 11.5 points in July, reaching record highs for the Asia-Pacific, North America and Africa markets.