IATA: Load factor reaches record high as capacity crunch continues
07 / 12 / 2020
By Rachelle Harry
Image source: Shutterstock
The latest air cargo figures from IATA show that demand continued to recover in October, although not as strongly as in September.
Meanwhile, industry-wide load factor reached a record high in October as the capacity crunch, driven by significantly reduced passenger services and bellyhold capacity, continued.
“The biggest problem for air cargo is the lack of capacity as much of the passenger fleet remains grounded,” said Alexandre de Juniac, IATA’s director general and chief executive.
As available capacity struggled to keep up with demand, industry-wide cargo load factor (CLF) rose from 56.9% in September to a record high 57.6% in October.
“That is nearly four times larger than the contraction in demand, indicating the continuing and severe capacity crunch,” IATA said.
IATA also reported that airfreight volumes measured in cargo tonne kms (CTKs) decreased by 6.2% year on year in October — a slight improvement on the 8% decline seen in September.
Global capacity in October, measured in available cargo tonne-kilometers (ACTKs), shrank by 22.6%.
Factors driving demand in October included growth in cross-border e-commerce and the manufacturing sector being “largely unimpacted by the resurgence of Covid-19 in Europe and North America”.
De Juniac noted: “Demand for air cargo is coming back — a trend we see continuing into the fourth quarter.
“The end of the year is always peak season for air cargo. That will likely be exaggerated with shoppers relying on e-commerce — 80% of which is delivered by air.
“So the capacity crunch from the grounded aircraft will hit particularly hard in the closing months of 2020. And the situation will become even more critical as we search for capacity for the impending vaccine deliveries.”
Looking at regional performance during the month of October, Latin America-based carriers showed the fastest improvement of all the regions; CTKs in October declined by 13% year on year and capacity declined by 32.2%.
IATA highlighted: “Improving operating conditions in a number of key markets including Brazil and recovering cargo capacity probably affected the improvement this month.”
Asia Pacific-based airlines experienced a 12.8% year-on-year decline in volumes in October, compared with a 15.9% decline in September. Capacity decreased by 23.9% — an improvement on the 29.5% decline in September.
“The recent improvement in volumes has been impacted by rising available capacity in the market,” IATA said.
North America-based airlines experienced an 6.2% year-on-year increase in cargo demand in October — not as strong as the 8.6% reported in September — while capacity decreased by 16.4%.
“Rising popularity of e-commerce in the US and smaller capacity declines have been main drivers behind the region’s outperformance compared with the rest of the industry,” the association said.
For Europe-based carriers, volumes decreased by 11.6% year on year in October, compared with the 15.4% decline in September. Capacity also shrank by 27.6%.
“Europe’s international air cargo business seemed to be largely unimpacted by the resurgence of the virus in October,” IATA observed.
Middle East-based airlines, which were negatively affected by “weaker demand in Africa-Middle East trade lanes”, experienced a 2% year-on-year decrease in cargo demand in October. Capacity decreased by 22.8%.
Africa-based carriers, which represent 1.8% of the world share, posted a 2.2% year-on-year increase in demand and a 22.5% decline in capacity.
“The main culprit behind the slowdown was the Asia-Africa market where CTK growth decelerated to 4% year on year,” IATA said.
However, it added: “Outsized volatility, typical for this small market, might partly explain the weakness.”