The International Air Transport Association (IATA) released data for global air freight markets in November showing that freight volumes improved compared to October, but remain depressed compared to 2019.
Capacity remains constrained from the loss of available belly cargo space as passenger aircraft remain parked.
Global demand, measured in cargo tonne-kilometers (CTKs), was 6.6 per cent below previous-year levels in November (-7.7 per cent for international operations). This was on par with the 6.2 per cent year-on-year drop in October. The year-on-year decline is skewed as November 2019 had a boost in demand from the waning US-China trade war.
Seasonally adjusted demand (SA CTKs) continued to improve, increasing 1.6 per cent month-on-month in November. This was a slight improvement over the monthly growth rate of 1.1 per cent in October. Current month-on-month gains indicate that SA CTKs will return to 2019 levels around March or April 2021.
Capacity still declining
Global capacity, measured in available cargo tonne-kilometers (ACTKs), shrank by 20 per cent in November ( 21.3 per cent for international operations) compared to the previous year. That is nearly three times larger than the contraction in demand. The capacity crunch is caused by a 53 per cent decrease in in belly capacity. This has only been partially offset by a 20 per cent increase in freighter capacity.
Strong regional variations continue with North American carriers reporting year-on-year gains in demand (plus five per cent), while all other regions remained in negative territory compared to a year earlier.
Economic conditions in November, normally the peak season for air cargo, remained positive. The new export orders component of the manufacturing Purchasing Managers’ Index (PMI) remained in growth territory in both developed and emerging markets for the third month in a row after two years of indicating negative growth.
Retail sales for November were up by around five per cent over 2019 for both China and the U.S., propelled by events like Black Friday and Singles Day.
“Air cargo demand is still down 6.6 per cent compared to the previous year, however we are seeing continuing month-on-month improvements. Severe capacity constraints persist as large parts of the passenger fleet remain grounded. This will put pressure on the industry as it gears up to deliver vital COVID-19 vaccines,” said Alexandre de Juniac, IATA’s director general and CEO.
November 2020 (% year-on-year)
1 % of industry CTKs in 2019 2 Year-on-year change in load factor 3 Load factor level
November Regional Performance
Asia-Pacific airlines reported a decline in year-on-year international demand of 9.5 per cent in November 2020 compared to the same month a year earlier. This was a 2.2 per cent improvement from the 11.7 per cent drop in October 2020.
While international traffic within the region remains weak (down 19.6 per cent year-on-year in November), exports on the Asia-North America and Asia-Europe routes are strong, driven by demand for e-commerce and PPE. International capacity remained constrained in the region, down 25.3 per cent. However, this was an improvement over the 28.5 per cent drop the previous month.
North American carriers posted a one per cent increase in international demand in November compared to the previous year—just the third month of growth in 12 months. This stronger performance compared to the rest of the industry was driven by a less stringent capacity crunch compared to other regions, with international capacity only down 12.7 per cent in November. Strong traffic on the Asia-North America routes also contributed to the performance, reflecting rising e-commerce demand for products manufactured in Asia.
European carriers reported a decrease in international demand of 13.7 per cent in November compared to the previous year. This was a 2.7 per cent decline in performance compared to October 2020. Air cargo in the region has been significantly affected by the resurgence of the COVID-19 virus and the impact of lockdowns on consumer demand and business activity. Lack of capacity remains a challenge, as international capacity decreased 24.9 per cent in November.
Middle Eastern carriers reported a decline of 2.2 per cent in year-on-year international cargo volumes in November, a 1.1 per cent deterioration from October. The lack of international connectivity is hampering air cargo recovery in the region, however seasonally adjusted demand remains on an upward trend. International capacity decreased by 18.6 per cent.
Latin American carriers reported a decline of 19.4 per cent in international cargo volumes in November compared to the previous year. This was a drop from the 12.2 per cent fall in October 2020. Air cargo in the region has been significantly affected by the resurgence of the COVID-19 virus and the impact of lockdowns on consumer demand and business activity. International capacity decreased 24.8 per cent in November, an improvement from the 28.9 per cent fall in October.
African airlines saw international demand fall by 1.7 per cent year-on-year in November, after three months of positive year-on-year growth. This is primarily driven by a soft performance on the Asia-Africa route, which was down 4.5 per cent year-on-year. International capacity decreased by 19.4 per cent.