(Updated 10:30 a.m. ET, Sept. 30, 2021 with new data on passenger traffic)
The International Air Transport Association reported Wednesday that international air cargo volumes in August grew 8.6 % compared to pre-pandemic levels, continuing a yearlong upward trend and bolstering the market narrative that demand is growing even faster in September because of the holiday shipping rush.
Counting domestic transport, the pace of growth tapered to 7.7% from 8.8% (revised) in July but remained ahead of the long-term average of 4.7% growth.
Growth likely would have been higher with retailers and manufacturers trying to keep up with customer orders amid widespread slowdowns in ocean shipping, but airfreight capacity deteriorated in August. IATA said available cargo space fell 1.6 points to 12.2% below 2019 levels, the largest drop since the start of the year.
The primary reason for the capacity reduction was airlines pulling back some flights as countries instituted further travel restrictions to prevent the spread of the delta variant. Passenger demand decelerated from 53% below 2019 levels in July to down 56%s in August, according to IATA. Domestic travel took the biggest hit, with demand 32.2% below 2019 compared to only down 16.1% in July.
The sudden change is illustrated by the U.S. market, where carriers have said cancellations increased and forward bookings shrank because of the delta variant. United Airlines officials say their growth projections for this year have been pushed back three or four months. China travel also slowed down considerably because of severe quarantine measures to contain a rise in COVID infections that limited the ability of people to fly and airports to maintain productivity.
International passenger demand in August was 68.8% below August 2019, an improvement compared to the 73.1% decline recorded in July as . But September bookings indicate a deterioration in international travel, IATA said.
The trade association said cargo load factors reached an all-time high for August. The combination of strong demand and a limited supply of aircraft has led to significant rate increases this year.
Optimism that airlines will return more passenger aircraft to service has grown since the Biden administration announced in mid-September that the U.S. will open borders to vaccinated travelers from Europe and other countries. Some airlines are already adding flights as bookings tick up.
Clive Data Services, which has access to more current data, reported at the beginning of the month that August cargo volumes grew 1% versus 2019, with load factors up 6% to 66%. The tight market sent spot rates up 20% month-over-month, and rates were up 112% from two years ago, it said. Soaring demand and COVID-related quarantine measures at Chinese airports have since pushed rates much higher, according to analysts.
IATA and Clive Data have different methodologies. Clive reports on cargo tons sold, whereas IATA reports on cargo tons flown. The former approach counts each ton once; the latter does so each time the shipment is transshipped through an intermediate airport and reloaded on another airplane.
IATA also calculates volume with a distance component — cargo ton-kilometers — so if the share of the long-distance route increases, the IATA numbers increase even if the same tonnage is moved. Clive Data gets its capacity data directly from airlines. The difference in capacity calculations comes from Clive counting the number of metric tons available to cargo per flight and IATA using available cargo ton-kilometers, a metric that combines weight and distance components.
Continued economic expansion, particularly in manufacturing output and export orders, bodes well for airfreight going forward because global inventories remain low and air is the fastest way to restock, especially when delivery times are longer than usual. The market is expected to tighten further as retailers push to receive merchandise in time for Black Friday and Christmas, as well as Singles Day in China.
“Many of the economic indicators point to a strong year-end peak season. With international travel still severely depressed, there are fewer passenger planes offering belly capacity for cargo. And supply chain bottlenecks could intensify as businesses continue to ramp up production,” said IATA Director General Willie Walsh. “The rapid slowdown in the domestic traffic recovery in August . . . shows how exposed air travel continues to be to the cycles of COVID-19. For governments that should send two messages. The first is that this is not the time to step away from continuing support of the industry, both financial and regulatory. The second is the need to apply a risk-based approach to managing borders–as passengers are already doing in making their travel decisions.”
North America remains the strongest market, with carriers there posting an 18% increase in international cargo volume during August. But capacity decreased 6.6% and there are signs it could get worse with productivity at many Chinese airports cut because of limits on workforce size due to COVID, and several airlines, such as Taiwan’s EVA Air, canceling flights because of infected pilots.
Asia-Pacific and European carriers experienced 3% and 6% increases, respectively, in international cargo volumes during August compared to the same month in 2019. Latin America has had difficulty attracting freighter aircraft, and with passenger networks severely reduced, cargo volumes fell 14% in August.