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Air cargo market levels off in November; passenger sector sinks

IATA says airfreight volume stalled, but is poised for more growth despite capacity crunch

The air cargo market paused its growth trajectory in November, but is expected to fully rebound from the pandemic effects by the end of the first quarter. (Photo: SwissWorldCargo)

The airline industry contrast couldn’t be more stark: International passenger demand during November was 88.3% less than in 2019, while cargo volumes were only 7.7% below the prior year’s level, according to the International Air Transport Association.

And the gap could widen with an explosion of COVID-19 cases forcing countries to implement travel bans and border closures, while demand for manufactured goods, e-commerce products, perishable foods and coronavirus vaccines puts the air cargo market on track to reach 2019 parity within three months.

In a market update for clients, freight forwarder Flexport said new product launches for gaming consoles and smartphones will exacerbate the capacity crunch through Chinese New Year in mid-February. New export orders and manufacturing output, key drivers of cargo shipments, have been growing since the third quarter, according to Markit.

November marked a stall in the monthly growth since last summer, but mostly because of difficult comparisons to November 2019. Cargo traffic actually dipped four-tenths of a point from the 6.2% year-over-year shrinkage in October, but IATA said the 2019 volumes were skewed by shippers pre-buying goods from China to avoid looming U.S. tariffs.

Seasonally adjusted demand continued to improve, increasing 1.6% month-on-month in November — a slight improvement over the monthly growth rate of 1.1% in October. The trend in monthly cargo gains suggests the market will return to 2019 levels around March or April, IATA said.

The dual market realities between air passenger and cargo are slightly different when domestic transportation is added to the mix. Overall passenger demand in November was down 70.3% compared to 2019, with load factors reaching a record low for the month of 58%. Cargo volume lagged the 2019 benchmark by 6.6%, as measured in cargo-ton-kilometers.

“The already tepid recovery in air travel demand came to a full stop in November. That’s because governments responded to new outbreaks with even more severe travel restrictions and quarantine measures. … Testing is the best way that we see to stop the spread of the virus and start the economic recovery. How much more anguish do people need to go through — job losses, mental stress — before governments will understand that?” said IATA Director General Alexandre de Juniac.

Although the air cargo business contracted year-over-year, November still represented continued improvement from the market bottom in May when extensive lockdowns at the beginning of the pandemic broadly curtailed manufacturing, retail shopping and air travel.

Independent analyst CLIVE Data Services, which uses a different methodology, has estimated that November cargo volume was 13% below the 2019 level.

Air cargo’s growth has been constrained by the shortage of transport capacity, but the amount of available space continues to get better. Capacity shrank 21% in the all-important international sector, which is three times greater than the contraction in demand and explains why rates on some key trade lanes are two to three times higher than in 2019.

Globally, airfreight rates were 70% higher in November, IATA said.

A 20% jump in freighter capacity was not able to offset the 53% plunge in available space in the lower holds of passenger aircraft grounded because of limited travel demand. Belly capacity was 5 points better in November than in October, but year-over-year freighter capacity growth fell from 26% in October in part because of flight cancellations in Shanghai.

Swiss International Air Lines illustrates the gradual way airlines are adding more passenger flights, and creating more room for cargo. This week it added frequencies and destinations in Asia and the Americas, including Los Angeles and Osaka, Japan.

The North American market continued to outpace the rest of the world, with carriers there reporting 5% gains in demand in November due to e-commerce activity and a 1% gain in international business. The Asia-Pacific and European carriers experienced double-digit drops in volume.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.


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Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals and a Silver Medal from the American Society of Business Publication Editors for government and trade coverage, and news analysis. He was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. He won Environmental Journalist of the Year from the Seahorse Freight Association in 2014 and was the group's 2013 Supply Chain Journalist of the Year. In December 2022, he was voted runner up for Air Cargo Journalist by the Seahorse Freight Association. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at [email protected]