Clive: Load factors rise as peak season approaches

Air cargo load factors increased to 68% during the final week of September, surpassing pre-COVID load factors during even peak season. Available capacity remained down by more than 10% from 2019 levels while chargeable weight was virtually flat, according to the latest monthly analysis from Clive Data Services. Airfreight rates were up 26% year over year, as the capacity crunch strengthens the “sellers’ market,” Clive noted. [caption id="attachment_97123" align="alignright" width="1024"] Courtesy of Clive Data Services[/caption] Global dynamic load factors had gradually declined during the past few months but, after reaching a low of 64%, has steadily gained 1 percentage point per week through the final week of September, Clive Managing Director Niall van de Wouw said during a media call today. While an uptick in load factors is expected going into the peak season, rarely is the market this constrained. “This is not likely to be a typical peak season,” van de Wouw said. “Things could get pretty messy pretty soon if the load factor climb continues, and we see no reason why it should not. Demand tends to get a bit stronger toward the end of the year and we see very little relief from a capacity point of view.” Although airfreight capacity is up by 19% from September 2020 levels, capacity was mostly flat from August to September, according to Clive’s analysis. Extra capacity is unlikely to return to the market until intercontinental passenger service resumes, and initial resumptions are likely to actually have a short-term negative impact on airfreight capacity as passenger luggage cuts into bellyspace capacity, van de Wouw noted. The trans-Atlantic market, heavily dependent on passenger flights, is likely to see the first drop in rates from additional capacity but, even with looser restrictions on international travel , there will be a lag in additional frequencies and routes returning, according to van de Wouw. “Airlines are likely to fill their current flights first before adding frequencies and upgrading aircraft,” van de Wouw said. “Initially that will lead to less available cargo capacity, but over time it will return to more normal levels.” In the meantime, rates are likely to remain elevated not only due to the lack of capacity, but also the scarcity mindset in the industry currently, van de Wouw said. “In airfreight, there is such a strain on capacity at the moment that people get jumpy and the negotiations are less balanced than if you just look at the demand-supply ration,” he said. “If demand goes up by only 1 to 2 percentage points, that could make people very nervous because they don’t want to be left out, not getting their shipments to the shops in time for the holidays. So it’s not just numbers, but also the emotion and the fear that I believe is in the industry in getting the goods from A to B, which would see quite a hike in prices not justified entirely by demand and supply.” Voting is now open for the 2021 Air Cargo Executive of the Year. Vote for one of our finalists or nominate another executive by Monday, Oct. 18! Click here to vote.

Clive: Load factors rise as peak season approaches

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