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Air cargo market 'exceptionally challenging' despite improvement in June


THE latest IATA statistics show that there are some signs of improvement in the decline in airfreight traffic in June, but business remains "exceptionally challenging".

The data shows that air cargo demand in cargo tonne km (CTK) terms declined by 17.6 per cent year on year in June, which is a "modest" improvement on the 20.1 per cent drop recorded in May. Over the first half of the year, demand was 14.5 per cent down on a year ago.

In contrast, load factors continued to improve during June and were up 11.5 percentage points on a year-ago at 57.3 per cent as a result of capacity dropping by 34.1 per cent.

Much of the decline in capacity was down to the grounding of passenger services, which led to a 70 per cent decline in bellyhold capacity, partially offset by a 32 per cent increase in freighter capacity.

IATA director general and chief executive Alexandre de Juniac said that there were still challenges ahead for the industry. "Cargo is, by far, healthier than the passenger markets but doing business remains exceptionally challenging," he said.

"While economic activity is re-starting after major lockdown disruptions there has not been a major boost in demand. The rush to get personal protective equipment (PPE) to market has subsided as supply chains regularised, enabling shippers to use cheaper sea and rail options.

"And the capacity crunch continues because passenger operations are recovering very slowly."

IATA also pointed out that economic indicators, which act as a bellwether for air cargo, were also showing signs of picking up, although air cargo was not moving as fast as the indicators suggest it should.

It said the new export orders component of the Purchasing Managers Index (PMI) recorded its strongest monthly increase since the series began in 1999.

Looking at regional performance, it was declines across the board, with European and Latin America-based carriers suffering the most.

In Europe, airlines reported a 27.2 per cent drop in cargo traffic, which was a slight improvement on the 29.5 per cent drop registered in May.

Latin America-based airlines saw their cargo traffic drop by 33.2 per cent year on year in June while capacity was down 52.3 per cent which indicated "a sizeable capacity crunch".

"The Covid-19 crisis is particularly challenging at present for airlines based in Latin America owing to strict lockdown measures," IATA said.

Asia Pacific-based airlines registered a 21.6 per cent decline in demand for the month, which is higher than the 18.8 per cent drop recorded in May.

In North America, airlines saw cargo demand drop by just 0.4 per cent compared with last year thanks to domestic demand. Middle East-based carriers reported a decline of 19 per cent year on year in June, an improvement from the 24.9 per cent fall in May. Africa-based airlines saw cargo traffic decline by 14.8 per cent year on year in June, which is a drop from the 7.3 per cent decline in May, reports London's Air Cargo News.

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