An Encouraging Recovery for Air Freight

By Geneviève Cournoyer-Scalise August 09 2021

While the ocean freight industry prices are still on the rise, caused in part by the shortage of containers and the two-speed recovery of global port activities still affected by the pandemic, some customers are tempted by the air freight industry, which is experiencing encouraging results, even better than before the pandemic.

After characterizing the year 2020 as “the worst year for air cargo demand since performance monitoring began,” with an 11.8% decrease in demand for international operations and a 24.1% decrease in global cargo capacity, which is more than the double of the contraction in demand, 1 the International Air Transport Association (IATA) reported some interesting results for the months of April and May.

The global economy is slowly recovering, and this has had a positive impact on the air freight industry. It recorded a growth rate of 11.3% in April 2021 and 9.4% in May 2021 compared to the data for the same period in 2019, before the pandemic.2

Air freight: a competitive advantage to consider

With the resumption of manufacturing operations, shops reopening, and the services offer recovery, the need for supplies is high and tight delivery schedules are crucial for some businesses. This partially explains the craze for air freight that allows rapid restocking of inventory. Obviously, the difficulties experienced by the maritime industry in meeting demand given the problems of port congestion, the container crisis, and still-soaring prices cannot be ignored.

Although fares for marine transportation are usually less expensive than those offered by air carriers, the gap between the two types of service tends to be narrowing. According to the IATA’s monthly report published in May, “Per kilogram of chargeable weight, air cargo was more than 12 times more expensive than ocean shipping prior to the crisis, but this has fallen to a multiple of 6 in May 2021, despite an increase in air fares.”3 This represents a substantial competitive advantage for some customers willing to pay a bit more to avoid disruptions to their supply chain which could affect their performance.

North America is in the lead

The evolution of air freight volumes capacity continued favourably in North America, which posted upward results for the month of May 2021. North American airlines contributed almost to half of the 9.4% global growth in international traffic, which rose to 25.5% compared to May 2019, with capacity up by 1, 6% globally.4

Air freight results in May 2021 VS May 2019 (FTK*)

ZoneGlobal trafficCapacityInternational traffic
Africa+23,1 %1,8 %+24,5 %
Asia Pacific+2,7 %-15,7 %+5,3 %
Europe+6,0 %-16,9 %+5,7 %
Latin America-14,3 %-23,3 %-14,0 %
Middle East+13,9 %-7,5 %14,1 %
North America+21,6 %+2,0 %+25,5 %
Market Total+9,4 %-9,7 %+10,4 %

* CTK : cargo tonne-kilometres – Source : IATA 

Air freight capacity is still limited

The volume capacity available for cargo versus the demand is one of the main challenges facing the airline industry. The pandemic has grounded thousands of planes around the world, limiting the transportation capacity for commercial goods on passenger flights. Some airlines have shown ingenuity in transforming some of their aircraft into all-cargo airplanes in order to keep part of their operations alive, but it will take a complete recovery of the airline industry to regain loading capacities comparable to the pre-COVID era. The current air freight capacity is still down 9.7% compared to May 2019. However, it has a ratio of 0.8% compared to April, a slight increase in the available capacity for a 4 consecutive month in 2021.5

A gradual return to normality

The full recovery of the tourist industry and a resumption of cross-border passenger flights will be necessary to usher in a gradual return to normality.

With vaccination campaigns ongoing all over the world, several countries have already started entering phases of deconfinement, implementing a reduction in health measures, and authorizing a gradual reopening of their borders. In Canada, the federal government has just announced the reopening of borders to fully vaccinated nonessential travellers effective August 9, 2021. Then, as of September 7, 2021, Canada’s borders will once again be open to all vaccinated travellers.

This news has already echoed among our air carriers who have significantly revised their service offering by increasing the number of international flights scheduled for the end of summer and autumn 2021. A gradual return to normality seems to be on the horizon for freight forwarders and their customers who will soon be able to benefit from greater loading capacity, a greater choice of routes, and who knows … maybe stabilization of the air freight fares if supply and demand strike a balance? Only time will tell…

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