Supply chain issues continue to weigh down air cargo growth

By Damian Brett

Credit: Shutterstock

Ongoing supply chain issues continued to weigh down air cargo demand growth in December but rates continued to surge.

According to figures from CLIVE Data Services, air cargo demand in December – traditionally the peak season – fell by 5% compared with the same month in 2019 (used for comparison to mitigate the impact of Covid in 2020).

This was described as one of the “weaker months of the year” by the data provider and follows on from a 3% decline in November compared with two years earlier.

Despite the unexpected demand drop off, rates continued to surge on the back of supply chain issues and stronger load factors.

Meanwhile, rates were up by 168% in December compared with two years ago.

“Continuing supply chain issues, congestion on the ground, and concerns over the new Omicron virus suppressed any end-of-year uptick,” the analyst said.

CLIVE managing director Niall van de Wouw said: “From a volume perspective, compared to 2019, November and December did not produce ‘the peak of all peaks’.

“The capacity and ‘dynamic load factor’ trends were more or less in line with earlier months, but rates kept on climbing.

“So, what is at play here? This latest December data amplifies what we saw in November, with issues on the ground impacting the efficiency of the value chain

“The rapid increase on Omicron and its impact on staff availability, hard lockdowns and their impact on business and consumer confidence are likely at play here.”

The dynamic load factor (taking into account weight and space) for December stood at 65% – two percentage points higher than two years ago.

Cargo capacity in December was 19% down on 2019 levels.

Looking ahead, market dynamics are not expected to change: “Looking at 2021 overall, after a very strong start to the year and pretty solid middle months, we witnessed a not-so-strong ending of the year.

“The wear and tear of close to 20 months of Covid started to really impact the efficiency of the value chain towards the end of 2021, and there are still no fundamental changes expected in the short-term that would change the current dynamics of supply chain shortages and elevated rates.”

Air cargo demand wanes as congestion puts the sector under pressure

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