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Omicron, weather dent air cargo growth in January

Volumes on par with 2021, but high rates gaining altitude again

Air cargo volume didn't grow in January on a year-over-year basis, but analysts say that's because of shipping delays. (Photo: Shutterstock/Jaromir Chalabala)

A new report shows air cargo demand was flat in January compared to last year and 2019, but the sampling of airlines’ shipment business doesn’t take into account ongoing disruptions to the air logistics system that have prevented carriers from transporting as many goods as shippers are presenting, essentially resulting in an undercount of volume.

The amount of air cargo moved by airlines last month inched up 0.1% compared to the opening month in 2021 and 0.2% versus 2019, Amsterdam-based Clive Data Services reported Wednesday. The market monitor uses a formula that combines weight and dimensional information to measure how much freight passenger and all-cargo airlines carry each month. Data from 2020 is not considered a reliable benchmark because of the unique pandemic effects.

The figures showed a sequential improvement from December, when Clive reported a 5% contraction in cargo volume.

On the positive side, cargo capacity was up 6 points versus January 2021, but is still 4% below pre-pandemic levels. 

The January results are emblematic of a predictable soft start to the year after the holiday rush, but volumes and rates started to increase in the past couple of weeks as shippers tried to get products exported before China’s Lunar New Year holiday, which started early this year on Feb. 1.

Last week the International Air Transport Association released figures showing air cargo volume grew 8.9% in December and 9.4% for the critical international sector compared to 2019. For the entire year, air cargo was up 6.9%. 

IATA said December capacity was 4.7% below pre-pandemic levels, with the heavy international segment down 6.5%.

The airline group collects data from nearly all its members about cargo weight multiplied by distance carried, but the reporting is a month behind and many industry professionals consider Clive’s methodology more sophisticated. 

The one area where numbers from the two organizations appear to closely align is in cargo capacity, which remains depleted because passenger airlines have only partially restored services due to the ongoing coronavirus outbreaks and government travel restrictions. All-cargo airlines have brought much more space to the market in response to a huge need from cargo owners seeking alternatives to congested ocean shipping for their most popular products, but it hasn’t been able to make up the difference.

Clive also measures how much of the aircraft’s cargo hold was actually filled with shipments. It said the January load factor, on average, was 62%, a point higher than in 2019 but 6 points below the first month of 2021.

Logistics companies say bookings for airfreight shipments are robust, especially on the trans-Pacific and westbound Asia-to-Europe routes as companies move goods ahead of factory slowdowns in China related to Lunar New Year celebrations. Adding to the capacity pressure is increased use of air to distribute COVID test kits and nasal swabs as governments try to contain the latest COVID wave.

But the air logistics system continues to be buffeted by events that are chipping away at already tight capacity and reducing efficiency, including bad weather and the rollout of 5G wireless service in the U.S. that led several international carriers to cancel flights for several days until fears about potential interference with aircraft flight systems could be allayed. 

The biggest ongoing threat to stable operations is COVID, as the omicron variant continues to sideline airline and ground personnel who are ill or forced into precautionary isolation. 

Lufthansa Cargo is slowly recovering after it stopped accepting transit bookings and canceled some freighter flights last week because of a rising number of infections among cargo handlers at its Frankfurt, Germany, hub. Air rates in and out of Frankfurt climbed because of the slowdown in cargo handling and reduced flight availability, according to the Freightos Air Index. Prices from Frankfurt to Southeast Asia increased more than 20% compared to the week before, to $2.77 per kilogram, while Los Angeles-to-Frankfurt rates climbed 16% to $3.06/kg.

As availability dipped last week, the Freightos Air Index (FAX) showed that air cargo rates in and out of Frankfurt climbed. Prices from Frankfurt to Southeast Asia increased more than 20% compared to the week before, to $2.77/kg, while LAX-FRA rates climbed 16% to $3.06/kg.

Airports in China for months have endured rolling slowdowns as authorities impose severe COVID restrictions when infections are detected. Cathay Pacific last month suspended most long-haul cargo routes through March because of strict quarantine rules for pilots imposed by the Hong Kong government that has reduced the airline’s ability to fill cockpits. With Hong Kong no longer functioning as a major air cargo hub, Seko Logistics is trucking goods from Hong Kong to airports in southern China, Shawn Richard, senior vice president for global air, said during media briefing this week.

China has also stopped accepting flights from U.S. majors American Airlines (NASDAQ: AAL), Delta Air Lines (NYSE: DAL) and United Airlines (NASDAQ: UAL) over concerns that travelers are importing COVID. The U.S. government reciprocated by banning 44 flights operated by Chinese carriers from the U.S. to China. Together the governments have eliminated from circulation 88 widebody flights that can carry lots of belly cargo on a major trade lane.

Major U.S. passenger airlines have canceled thousands of flights to start the year as pilots and cabin crews call out sick without enough reserve staff to fill with staffing levels still below pre-pandemic levels. 

On Tuesday, FedEx Express said it has resumed International Economy pickups that had been curtailed since mid-January because omicron infections had hit its pilot force and reduced flying capability. In a service alert it also said that its Economy Domestic Freight, offering second- and third-day delivery windows, is currently suspended.

Another major winter storm is moving through the Central U.S., causing road, air and rail transportation delays.

During heavy snow and slippery conditions Friday, a China Airlines Cargo 747-400 freighter ran into a cargo cart on the ramp at Chicago O’Hare International Airport, damaging an engine. Reports from the scene indicated that snow hadn’t been plowed off the center taxi line, causing the crew to drift left and strike the equipment. The accident removes a large cargo aircraft from service for an undetermined amount of time until repairs can be made. 

Overall, airfreight rates are 2.5 times higher than at the start of 2019, after a small dip in late December that coincided with the end of peak shipping season. Rates on heavy international trade routes are often several orders higher than the average and freight brokers say rates have gone up in the past month. Shanghai exports to the U.S. are running above $10/kg now, according to FreightWaves’ SONAR.

The Freightos index shows average global spot prices ending January at about $4.20/kg, up 7% from a year ago. 

Xeneta acquires Clive Data

Clive Data was acquired last week by Oslo, Norway-based Xeneta, an ocean and airfreight rate benchmarking, analytics and container index company.

Xenata has integrated Clive Data’s “dynamic” load factor and capacity analysis into its market analytics platform since last summer. The combination will allow Xeneta to extract more value from the weekly airfreight data service as companies look for more timely insights in a volatile market.

“We want our customers to have the best and most timely global ocean and air freight data trends,” said Xeneta CEO Patrik Berglund in the announcement.

Niall van de Wouw, formerly managing director of Clive, is now chief airfreight officer at Xenata.

Click here for more FreightWaves and 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]