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Airfreight volumes, pricing strengthen into 2021

Planes nearly full on key trade lanes; shippers pay more than 2x last year’s rate, data providers say

Cathay Pacific has added a new route from Hong Kong to Riyadh. Many carriers have added more flights, but it hasn't been enough to offset the thousands of passenger planes still grounded by the pandemic. (Photo: Jim Allen/FreightWaves)

The air cargo market ended 2020 on a high note, picking up steam again in December and setting the stage for a potential full recovery to pre-pandemic levels in the first quarter of 2021 with little sign there will be a normal seasonal falloff, according to the latest industry data.

Global airfreight volumes rose 2.5% in December on a sequential basis, with the gap in year-over-over demand narrowing to minus 5% compared to the 37% contraction at the height of the global economic shutdown in April, CLIVE Data Services reported Wednesday.

Particularly encouraging for cargo airlines and freight forwarders was the first positive year-over-year growth in weekly volumes in more than 12 months. CLIVE said volumes increased 8% in the two weeks since Dec. 21, with a load factor of 65% for the week that ended Sunday — 13 points higher than the comparable period a year ago. Air shipments are being driven by manufacturing growth, e-commerce orders and new releases of COVID-19 vaccines.

The International Air Transport Association last month forecast air cargo traffic would return to pre-crisis levels early this year. That’s a sharp contrast to the passenger airline industry, which is not expected to fully bounce back for another three years.

For December, planes were 71% full with cargo on average. That is a high mark by historical standards as cargo volumes shook off an unexpected 1% dip in November — the first since the airfreight market began to recover in June — during what is considered the peak international shipping season. The stall in demand coincided with increasing spread of the COVID-19 virus and major lockdowns in Europe and other regions.

Volume in November was 13% below what it was in November 2019. 

CLIVE Data’s methodology for benchmarking supply and demand is relatively unique in that it measures capacity as a relationship between weight and volume utilization, not just weight, based on data directly sourced from airlines. IATA, which compiles lagging data, is expected to announce November cargo volumes this week.

Many all-cargo companies continue to add incremental capacity, and passenger airlines also continue to offer cargo-only service with their otherwise empty passenger jets. 

The extra aircraft and flights led to a 2% increase in overall capacity in December versus the prior month, but the shortage of space to move goods is still 21% less than a year ago because of the drastic decline in regular passenger flights.

Airfreight rates held steady or increased in December. Westbound pricing from Asia to Europe/U.S. and Europe to the U.S. was significantly higher compared to eastbound rates, as demonstrated by Shanghai-to-Europe prices more than four times higher than from Frankfurt to China and the U.S. and 2.5 times higher than Chicago to Europe, according to the TAC Index.

Rates from China to key U.S. and European cities are still 35% higher than before the start of the peak season in October, and more than 150% higher than their levels this time last year, said Eytan Buchman, chief marketing officer of Freightos, an online freight marketplace, 

Demand remains strong on most major lanes out of Europe, according to booking data from Freightos’ affiliate WebCargo, with December only about 6% lower than the October peak-season high. 

The Association of Asia-Pacific Airlines underscored the trends with new figures showing cargo volume for the region’s carriers increased for the third consecutive month in November, although volume (measured as freight-ton-kilometers) was still down 11.3% from a year ago. Load factors were nearly 70% despite increased deployment of aircraft for dedicated cargo flights. 

Cathay Pacific on Tuesday launched a weekly freighter service between Hong Kong and Riyadh, Saudi Arabia, via Dubai, to meet growing demand for shipments of e-commerce and other cargo. 

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 from the American Society of Business Publication Editors for government coverage and news analysis, and was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. 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]