• Monday, May 27, 2024
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BusinessDay

Insufficient capacity dampens air cargo in August

Why compensations on flight delays, cancellations should be shared responsibility – IATA

The International Air Transport Association (IATA) has released data for global air freight markets in August showing that improvement remains slow amid insufficient capacity.

Demand moved slightly in a positive direction monthon-month; however, levels remain depressed compared to 2019. Improvement continues at a slower pace than some of the traditional leading indicators would suggest. This is due to the capacity constraint from the loss of available belly cargo space as passenger aircraft remain parked.

Global demand, measured in cargo tonne-kilometers ( CTKS*), was 12.6 percent below previous-year levels in August (-14 percent for international operations). That is a modest improvement from the 14.4 percent year-on-year drop recorded in July. Seasonally-adjusted demand grew by 1.1 percent month-on-month in August.

Global capacity, measured in available cargo tonne-kilometers (ACTKS), shrank by 29.4 percent in August ( 31.6 percent for international operations) compared to the previous year. This is basically unchanged from the 31.8 percent year-on-year drop in July.

Belly capacity for international air cargo was 67 percent below the levels of August 2019 owing to the withdrawal of passenger services amid the COVID-19 pandemic. This was partially offset by a 28.1 percent increase in dedicated freighter capacity. Daily widebody freighter utilization is close to 11 hours per day, the highest levels since these figures have been tracked in 2012.

Economic activity continued to recover in August reflected, among other things, in the performance of the Purchasing Managers’ Index (PMI) indicator of economic health in the manufacturing sector:

The new export orders component of the manufacturing PMI rose by 5.1 percent year-on-year, its best performance since late 2017.

The PMI tracking global manufacturing output increased month-on-month and remained above the 50mark, indicating growth.

Air cargo demand improved by 1.8 percentage points in August compared to July. That’s still down 12.6 percent on previous year levels and well below the 5.1 percent improvement in the manufacturing PMI. Improvement is being stalled by capacity constraints as large parts of the passenger fleet, which normally carries 50 percent of all cargo, remain grounded.

“The peak season for air cargo will start in the coming weeks, but with severe capacity constraints shippers may look to alternatives such as ocean and rail to keep the global economy moving,” Alexandre de Juniac, IATA’S Director General and CEO said.

August regional performance

Asia-pacific airlines saw demand for international air cargo fall 18.3 percent in August 2020 compared to the same period a year earlier. After a robust initial recovery in May, month-onmonth growth in seasonallyadjusted demand declined for the second consecutive month. International capacity is particularly constrained in the region, down 35 percent.

European carriers reported a decrease in demand of 19.3 percent compared to the previous year. Improvements have been slight but consistent since April’s performance of -33 percent. Demand on most key trade lanes to / from the region remained weak. The large Europe–asia market was down 18.6 percent yearon-year in August. International capacity decreased 33.5 percent.

African airlines saw demand increase by one percent in August. This was the fourth consecutive month in which the region posted the strongest increase in international demand and only an instance of year-on-year growth among all regions in international volumes. Investment flows along the Africa-asia route continue to drive the regional outcomes.