Air cargo makes recovery “that passenger departments will be dreaming of”

The latest data form CLIVE Data Services and TAC Index suggests that in the last 10 months, global air cargo volumes have recovered to pre-Covid levels, demonstrating the “robustness” of the market and “a recovery that airline passenger departments will be dreaming of”.

In its February 2021 report, analyst CLIVE Data Services compared this year’s figures with those in 2019 and 2020 to give “meaningful perspective” on the impact of and recovery from Covid — particularly in light of “Chinese New Year (CNY) and leap year variances”.

Air cargo capacity in February 2021 was 8% lower than 2019 and 5% lower than in 2020.

Last month, CLIVE’s dynamic loadfactor — calculated on both the volume and weight perspectives of cargo flown and capacity available — was up 5 percentage points on February 2019 and 9 percentage points higher than same month in 2020.

The overall dynamic load factor of 69% was at the same level as January 2021. Meanwhile, month-over-month volumes climbed 7% despite February being three days shorter than January, as capacity rose 5% over January.

Niall van de Wouw commented: “These are tricky months to compare due to the CNY and leap year variances, so we have to be careful in how we read the market. To give a meaningful view, it makes senses to keep an eye out to 2019 before the pandemic took hold and, on that basis, air cargo demand is now nearly at par with pre-Covid volumes despite much less capacity in the market.

“If we normalise for last year’s Leap Year, we can see a 2% growth in global volumes compared to February 2020 but that does not tell the tale by any measure — the apparently modest global growth number is masking what lies underneath. Volumes from China to Europe, for example, were nearly 5 times higher in the four weeks of February 2021 than in the similar weeks in 2020. This was caused by the dramatic drop in volumes because of the factory closures a year ago in response to the Covid outbreak. Volumes from Europe were down by 11% for the same period.

“Demand is increasing and there are a lot of passenger planes sitting around that could start flying cargo, but I don’t think that will happen proactively. Given the high financial risks, when it comes to adding capacity, airlines are more likely to follow the market as opposed to trying to stimulate it. But, if it makes sense, they will surely fly those aircraft.

“Air cargo has been resilient and, bit-by-bit, has clawed back the losses we saw only a few months ago. In April 2020, volumes were down 39% but are now back to the pre-Covid level.

He added: “Who would have thought that possible inside 10 months? It’s a recovery airline passenger departments will be dreaming of.”

Additionally, Tac Index said volumes, capacity and load factors are continuing to be reflected in higher prices.

Robert Frei, business development director at Tac Index, said: “Volatility remains high (also intra month) and, given the much higher pricing levels than a year ago, is having a major impact.”

Data from Tac Index shows that while the monthly pricing average seems ‘mundane’, weekly rate levels reveal a lot of volatility.

Tac Index says the Baltic Exchange Index in February was 2% higher than in January, taking into account Chinese New Year starting February 12 this year.

When looking at impact of CNY on the China-Europe lane, compared with previous years, in the two weeks prior- and post-CNY, Tac Index observed:

• 2019 – overall period +8%
• 2020 – overall period -4%
• 2021 – overall period -13%

Tac Index added that February 2021 saw the largest drop in yield, compared with the last two years, during the four weeks around CNY. The company said that in absolute terms this period compares as follows:

• 2019 – average RMB 20 /kg
• 2020 – average RMB 17.5 /kg = 11% less than the previous year
• 2021 – average RMB 31 /kg = 79% higher than the previous year; or 63% higher than 2019

The analyst said “interesting observations” can also be made when comparing China with Hong Kong. On the Hong Kong-EUR lane, rates were flat compared with China-Europe, which increased by 7%.  Meanwhile, Hong Kong-US rates went up by 2% and China-US prices dropped by 1 %.

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