Date: Wednesday, July 28th, 2021
Source: Sourcing Journal
Air cargo demands increased 9.9 percent in June compared to pre-COVID-19 performance in June 2019, the International Air Transport Association (IATA) reported on Wednesday.
This pushed first-half air cargo growth to 8 percent, its strongest first-half performance since 2017, IATA said.
Overall capacity remained constrained at 10.8 percent below June 2019 due to the ongoing grounding of passenger aircraft. Belly capacity was down 38.9 percent from two years earlier, the best comparable period, partially offset by a 29.7 percent rise in dedicated freighter capacity.
Underlying economic conditions and favorable supply chain dynamics remain highly supportive for air cargo, IATA noted. The U.S. inventory to sales ratio is at a record low, meaning businesses have to quickly refill their stocks and typically use air cargo to do so.
The Purchasing Managers Indices (PMIs)–leading indicators of air cargo demand–show that business confidence, manufacturing output and new export orders are growing at a rapid pace in most economies. Concerns of a significant consumer shift from goods to services have not materialized, IATA said.
The cost-competitiveness and reliability of air cargo relative to that of container shipping have improved and the average price of air cargo relative to shipping has reduced considerably. At the same time, scheduling reliability of ocean carriers has dropped from around 40 percent in May compared to 70 percent to 80 percent prior to the crisis.
“Air cargo is doing brisk business as the global economy continues its recovery from the COVID-19 crisis,” Willie Walsh, IATA’s director general, said. “With first-half demand percent above pre-crisis levels, air cargo is a revenue lifeline for many airlines as they struggle with border closures that continue to devastate the international passenger business. Importantly, the strong first-half performance looks set to continue.”
Regional variations in performance were significant. Asia-Pacific airlines saw demand for international air cargo increase 3.8 percent in June 2021 compared to the same month in 2019. International capacity remained constrained in the region, down 19.8 percent versus June 2019.
“Even though demand remains high, the region faces moderate headwinds from the lack of international capacity and manufacturing PMIs that are not as strong as in Europe and the U.S.,” IATA said.
North American carriers posted a 23.4 percent increase in international demand in June compared to two years earlier. IATA said underlying economic conditions and favorable supply chain dynamics remain supportive for air cargo carriers in North America. International capacity decreased by 2.1 percent compared with June 2019.
European airlines registered a 6.6 percent increase in international demand in the period, with international capacity decreasing 16.2 percent. Manufacturing PMIs are strong in Europe, indicating that market dynamics remain supportive for air cargo carriers in Europe, IATA noted.
Middle Eastern carriers saw a 17.1 percent lift in international cargo volumes last month versus June 2019, boosted by strong performances on the Middle East to Asia and Middle East to North America trade routes. International capacity in June was down 9 percent.
Latin American airlines reported a 22.9 percent decline in international cargo volumes in June compared to the 2019 period. This was the worst performance of all regions and a weakening of performance compared to the previous month, according to IATA. International capacity decreased 28.4 percent.
African airlines’ international cargo demand in June increased 33.5 percent compared to the same month in 2019. This was the strongest performance of all regions, but notably on small volumes, as African carriers carry only 2 percent of global cargo. International capacity in June fell 4.9 percent.