Consultant Insight: Improvement in US freight volumes

The loss of air routes has had a big impact on the cargo market, leading to capacity constraints and higher rates, and forcing shippers to adjust by collaborating with forwarders who have chartered flights and seeking alternative transportation solutions. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] One-third of the world’s air routes have been lost due to Covid-19, according to flight data provider OAG and highlighted by a recent Bloomberg article . Some industry analysts believe these flights may not return for another four or five years, while others say they will not come back at all. However, according to the U.S. Bureau of Transportation Statistics, U.S. airlines carried 19% more cargo by weight in September 2020 than September 2019. This rise includes a 22% increase in domestic cargo and a 10% increase in international cargo. The larger increase in domestic air cargo was probably due to inventory replenishment that had been delayed from earlier in the year, along with holiday season preparation, and the expansion of manufacturing activity. Despite the increase in September volumes and elevated airfreight rates, cargo revenue declined for domestic airlines during the third quarter . Delta reported cargo revenue down 25% and Southwest freight revenue declined 2.4% for the quarter. However, American Airlines’ cargo revenue was flat at $207 million compared to the same period in 2019. During Q3, American doubled its total cargo-only flying — both domestic and international — from August to September, and operated more than 1,900 flights to 32 destinations. in September other transportation modes benefited month to month from a volume perspective. The U.S. Bureau of Transportation Statistics’ Freight Transportation Services Index for September increased 0.8% from August. The index, based on the amount of freight carried by the for-hire transportation industry, attributed the month-to-month increase to water, rail intermodal, rail carload and airfreight. September was a record month for the Port of Los Angeles, a gateway for most Asian imports into the U.S. Total 20-foot equivalent units (TEUs) processed increased by 13.3% compared to 2019. Loaded imports increased 17.3% while loaded exports declined 0.3%. The other major gateway for Asian imports, the Port of Long Beach, reported a 12.5% increase in container volumes for September 2020, compared to September 2019. Contributing to the record September was a surge in imports, which grew more than 14% in September compared to the previous year. Total volume for the third quarter was up over 14% year over year to nearly 2.3 million TEUs, topping the previous record set during the third quarter of 2017 by nearly 160,000 TEUs. According to Association of American Railroads Vice President John T. Gray, “September 2020 was the fourth-best intermodal month in history for U.S. railroads, as retailers and others restocked their inventories and prepared for the holiday season.” Despite month-to-month gains in the Freight Transportation Services Index, it fell 3.9% year over year and was down 2.9% year to date. For the rest of the year, freight volumes are expected to remain high due to inventory restocking, the holiday season, and the lead-in to 2021’s Chinese Lunar New Year on Feb. 12, 2021. “Large retail stores are reopening, merchants are stocking up for the winter holidays and the increased use of e-commerce appears to be an enduring trend picked up by consumers during the recent stay-at-home orders,” said Mario Cordero, executive director of the Port of Long Beach in a press release . “Still, we must move ahead with caution during the remaining months of 2020 because the national economy continues to be heavily impacted by the COVID-19 pandemic.” “Caution” will be the operative word as we head into 2021 and anticipate a COVID-19 vaccine. The vaccine will impact capacity across all transportation modes, although by how much is not known. Shippers will have to remain in close contact with all transportation and logistics partners.

Consultant Insight: Improvement in US freight volumes

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