Despite dip in May air cargo volume, rates remain high

Global air cargo volumes transported saw a 4% drop from pre-pandemic levels in May 2021, compared to the same month in 2019, according to chargeable weight data from Clive Data Services. While April reflected continued positive growth in the air cargo market, market uncertainties and extended public holidays were potential contributors to the fall in demand toward the end of May, according to the report. Clive’s June 2021 market data report will help determine whether last month’s public holiday disruptions account for the shift in demand, or if April’s 1% growth, compared to the same month in 2019, was an inaccurate depiction of sustainable growth recovery for the air cargo industry for the rest of the year. “There were several (extended) public holidays in May, which were not present in May 2019 ... which will have impacted the monthly growth rate in a negative manner,” Niall van de Wouw, Clive’s managing director, noted in the data report. “By how much is hard to tell — so May 2021 is more complex to qualify than to quantity. The monthly data leaves us with a question mark that is likely to go unanswered until we see June’s level of demand.” [caption id="attachment_95848" align="aligncenter" width="887"] Courtesy of Clive Data Services[/caption] While the dynamic cargo load factors for May, which consider both volumetric and weight-based capacity, increased by 7 percentage points from May 2019 to 69%, they fell compared to April and March 2021, by 2 and 4 percentage points, respectively, according to the data. Available capacity remained down 21% in May 2021 compared to May 2019. Airfreight rates were higher in May than in April but saw a decline on certain trade lanes late in the month after peaking early, according to TAC Index data. “Airfreight capacity is still scarce on many key trade lanes, so prices remain strong as economic activity picks up whilst passenger air capacity remains constrained due to restrictions on international travel,” Gareth Sinclair, board advisor at TAC Index, said in the report. Pricing strength continues to be attributed to strong demand out of China and Hong Kong to the U.S. and Europe, and from Europe to the U.S., said Sinclair. Despite prices declines in the recent weeks, Sinclair noted that all three trade lanes saw price increases in May over April, with peaks in early May. Rates on indexed routes between HKG and U.S. airports were up by 9% in May from the previous month to $8.90 per kilogram, the highest recorded rate of the year so far, according to market data. Sinclair attributed this growth to the increasing demand for e-commerce and strengthening economic activity. Although China-to-Europe rates were 5% higher in May 2021 compared to the previous month, there have been declines in recent weeks from the 2021 high of $5.07 per kg seen during the week ending May 3. In the U.S.-to-Europe trade lane, there has been a steady decline in the weekly rate since the 2021 high of $2.30 per kg, with the May average down 5% compared to April. However, prices rose in the last two weeks of the month, according to TAC Index. Meanwhile, the Europe-to-U.S. trade lane has had positive trending rates in recent weeks, with a 2% average increase for May compared to April, according to the report, and this lane continues to be the most volatile market. Clive will continue to use pre-pandemic data from 2019 for 2021 comparisons until at least Q3, due to extreme traffic fluctuations seen throughout the first half of 2020.

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