MARKET
MOVEMENTS
Through a
glass, darkly apinan/stock.adobe.com
Extrapolation, they say, is only as good as the data originally
input. With that in mind, the Editor asks whether recent
statistics can show the sector much about the future.
Given that this periodical
is bi-monthly, for the
August issue it would
appear to make good sense that
data is drawn from May to
early July: that way, at least,
some relatively recent industry
fi gures can be presented.
Needless to say, there is no
shortage of specialists in the
fi eld of data collection but
what follows is correlated from
the fi ndings of just two.
CLIVE’s Managing Director,
Niall van de Wouw, when
looking back to May,
commented that air cargo
volumes had improved
month-on-month but that a
dip in the fi nal two weeks
could be considered a cause for
concern. Global industry data
for May supported the
continued small recovery of air
cargo volumes, yet that fall in
demand seemed to be the
harbinger of challenging times
ahead, as airlines returned
capacity to the market.
Overall, says de Wouw, the
month of May 2020 was not as
bad for the global air cargo
industry as that of April 2020.
As hinted in CLIVE’s data for
April, the industry seemed to
have passed the (initial)
bottoming out phase. After a
37% decline in volumes year-on-year in April, the corresponding
fi gure for May of a 31% decline revealed a slight upward curve
and, measured alongside a capacity decline of 42% at the same
point last year, the pressure on capacity remained high.
Consequently, CLIVE’s “dynamic load factor”, which is based on
both the volume and weight perspectives of cargo fl own and
capacity available, increased month-on-month from 67% to 69%.
Good news for the freight movers, then – but just as March
and April showed aberrations, so did May. March ended far worse
than it started; while for April, it was the other way around.
Looking back, it becomes clear that May ended in a weaker state
than it began. After a series of week-over-week growth in volumes,
a decline set in during the week of May 18-24, followed by an
even stronger decline for the last week of May. During these last
two weeks, the capacity growth rate compared to the previous
week was higher than the volume growth, thereby reducing the
dynamic load factor for the fi rst time in weeks by 0.5%. This
easing of pressure on capacity had a downward impact on freight
rates on major trade lanes.
An erratic market
“Looking at the last 12 weeks,” commented de Wouw in May, “it
is clear to see that market volumes remain erratic and that this
will continue for the foreseeable future. This is one of the few
certainties we have at the moment. We can see some dark clouds
gathering and this is a cause of concern for air cargo. This is why,
in navigating these uncertain times, weekly data becomes not
only relevant to decision-making, but crucial. Knowing what is
happening each week gives the industry the clearest direction. We
do not see signals yet that the increase in capacity is being met by
growth in demand. With the announcements of increases in
passenger schedules, global air cargo revenues may suffer
collateral damage of more capacity returning to the market.”
June: the turning point?
On to June, where air freight rates continued to settle on the main
trade lanes from China to the US and Europe, as demand softened
from the peak in mid-May.
Shippers were paying about
US$7/kilogramme outbound
from China to Europe, which
was about two and half times
the rate at the start of the year,
and similar to the price in
April, data from The Air Cargo
Index reveals. Three or four
weeks prior, rates were double
– or more. Rates were also
easing from China to the US,
down to about US$5.75/
kilogramme.
Capacity remained very
tight in many parts of the
world because there was a
dearth of passenger aircraft
operating that could offer
bellyhold space to shippers. It
has been estimated that the
industry was short of about a
quarter of the normal airlift
because airlines parked fl eets
when the coronavirus spread,
and much of the available
cargo space was targeted at
medical supplies for the
response effort.
According to CLIVE, as PPE
volumes faded, so global air
cargo volumes in June
provided the fi rst real
indicators of structural
recovery. The industry seemed
to be slowly getting back up on
its feet, with volumes in the
fi rst four weeks climbing 6%
compared with the full four
weeks of May.
Volumes in the last week of
June were 12% higher than in
the fi nal week of May. The
18 August 2020 www.airlogisticsinternational.com
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