IATA: Airfreight market improved in May, but a full recovery will take time

In its latest air cargo analysis, IATA has revealed that the airfreight market improved in May, but “a full recovery will take time”.

Industry-wide demand, measured in cargo tonne km (CTKs), experienced a double-digit decline for the third consecutive month — by 20.3% year-on-year, an improvement on the 25.6% decline in April.

“Seasonally adjusted CTKs also rose in May compared with April, suggesting that the trough in cargo volumes may have passed,” IATA said.

Due to the loss of bellyhold operations from passenger aircraft that were parked in response to the coronavirus pandemic, however, capacity remains unable to meet demand.

Industry-wide capacity in May, measured in available cargo tonne km (ACTKs), declined by 34.7% year on year — a deceleration from the 41.6% decline reported in April.

This in turn led to cargo load factors increasing 10.4 percentage points in May, a slight decrease from the 12.8 percentage points reported in April.

“Cargo rates also seem to have peaked around mid-May. With passenger traffic starting to return, the capacity crunch in cargo is expected to begin to unwind in the near future,” IATA added.

IATA attributed the recent shift in air cargo trends to disrupted supply chains brought about by Covid-19 restrictions, followed by industrial production stabilising globally while rising in China.

Alexandre de Juniac, IATA director general and chief executive, commented: “Air cargo demand is down by over 20% compared with 2019 — and with most of the passenger fleet grounded, capacity was down 34.7%.

“The gap between demand and capacity shows the challenge in finding the space on the aircraft still flying to get goods to market. For that, the prospects for air cargo remain stronger than for the passenger business, but the future is very uncertain.

“Economic activity is picking up from April lows as some economies unlock, but predicting the length and depth of the recession remains difficult.”

Looking at regional performances, airlines based in Africa demonstrated a “resilient performance”, with a 7.4% year-on-year decline in volumes in May.

North America-based carriers performed the best of the regions, with a 3.6% year-on-year decline in May. IATA said: “The resilient performance is due to shorter and less stringent lockdowns in certain regions, the large freighter fleets of a few regional airlines as well as robust US-China trade volumes.”

Meanwhile, Latin American carriers saw a 28.3% year-on-year decrease in demand. “This was a significant improvement from the 43.7% decline in April,” IATA highlighted.

It added: “The Covid-19 crisis is particularly challenging for airlines based in Latin America owing to strict lockdown measures.”

Carriers based in the Middle East reported a decline in volumes of 25.2% year-on-year in May — an improvement on the 36.3% decrease in April. “Despite a number of carriers in the region maintaining some cargo capacity, traffic on all key routes was low,” IATA added.

Asia-Pacific airlines saw demand fall by 24.2% in May, compared with the same period a year earlier. “Shipments of personal protective equipment (PPE) are helping support airlines in the region,” IATA explained.

It added: “Seasonally adjusted freight volumes also rebounded slightly in May and have now reached 75% of their pre-Covid-19 crisis levels”.

Finally, Europe-based carriers performed the worst out of all regions, with a reported 29.5% year-on-year decline in volumes in May. IATA suggested that this was due to “limited manufacturing output and lockdowns through to mid-May”.