COVID slows cargo recovery in March but demand outlook is robust

Cargo volumes in March were down by 3% from March 2019 levels, marking a slowdown from the improvements reported during January and February, according to the latest data from Clive Data Services. [caption id="attachment_95170" align="alignright" width="2560"] Courtesy of Clive Data Services.[/caption] In addition to supply-side pressure from capacity significantly down from March 2019 levels, the decline in volumes may point to negative consumer sentiment as several countries return to lockdowns and COVID-19 vaccines face supply and efficacy concerns, according to Clive’s managing director Niall van de Wouw. IATA also warned of potential headwinds that could negatively impact airfreight traffic in upcoming months in its most recent traffic update , noting particular weakness in many emerging markets. “After indicators that the global air cargo market was seeing some ‘light at the end of the tunnel’ in January and February after a year of such high disruption, this latest industry data will reign in that optimism slightly,” said van de Wouw, adding the drop “may reflect COVID-19 fatigue” in buying habits as the pandemic and lockdowns drag on. However, demand still remains strong relative to available capacity. “Flights are very full from a cargo point of view, but with no recovery in the passenger market, airline intercontinental operations are still mainly cargo-driven and they need higher prices to make these operations financially viable,” van de Wouw said in the press release. Load factors are up significantly on most major trade lanes, with Clive reporting the westbound trans-Atlantic load factor reaching 90% for the last two weeks of March. Dynamic load factors on the China-to-Europe trade lane stood even higher, at 93% for the month. Airfreight rates in March were up significantly not only from 2019 levels but from March 2020, when the impact of demand for personal protective equipment first emerged, according to Robert Frei, business development director of TAC Index. After forecasting volatility in February , Frei noted in the press release that the same volatility did not emerge either month-over-month or intra-month during March. “Whether this can now be viewed as a relatively stable situation on a much higher level than in 2019 remains to be seen,” said Frei. Looking ahead, high airfreight rates are generally expected to linger at least through 2021, suggesting that any stability in rates will represent a significant increase from 2019 levels. “We believe there is not going to be an off-peak at all, or at least that’s the way we’re looking at it,” Evan Rosen, president for the Americas region and global chief commercial officer at Sri Lanka-based logistics company EFL Global, recently told Air Cargo World . With the fallout from the roughly week-long blockage of the Suez Canal further exacerbating current problems in ocean freight and spilling over into airfreight, “that’ll reinforce what we’ve thought all along, that 2021 is just going to continue to be one big peak season, pretty much,” Rosen said.

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