The International Air Transport Association (IATA) released data for global air freight markets in May showing a slight improvement in the air cargo market, although capacity remains unable to meet demand as a result of the loss of belly cargo operations on passenger aircraft that have been parked.
In a release, IATA said global cargo demand, measured in cargo tonne-kilometres (CTKs), fell by 20.3% in May (declining by 21.5% for international operations) compared to the previous year but already showing an improvement from the 25.6% year-on-year drop recorded in April.
Global capacity, measured in available cargo tonne-kilometres (ACTKs), also shrank by 34.7% in May (with 32.2% decline for international operations) compared to the previous year, also showing a slight dip from the 41.6% year-on-year drop in April.
IATA said belly capacity for international air cargo shrank by 66.4% in May compared to the previous year due to the withdrawal of passenger services amid the COVID-19 crisis (up slightly from the 75.1% year-on-year decline in April) — partially offset by a 25.2% increase in capacity through expanded use of freighter aircraft.
The cargo load factor (CLF) rose 10.4 percentage points in May, a slight decrease from the 12.8 percentage point rise in April. However, IATA said the extent of the increase suggests that there is still pent-up demand for air cargo which cannot be met due to the continued grounding of many passenger flights.
Better outlook for cargo than pax but still uncertain
Global export orders continue to fall but at a slower pace last month. Meanwhile, the Purchasing Managers Index (PMI) tracking new manufacturing export orders improved from the trough seen in April despite remaining in contractionary territory.
“Air cargo demand is down by over 20% compared to 2019. And with most of the passenger fleet, grounded capacity was down 34.7%. The gap between demand and capacity shows the challenge in finding the space on the aircraft still flying to get goods to market,” said Alexandre de Juniac, IATA's Director General and CEO.
“For that, the prospects for air cargo remain stronger than for the passenger business but the future is very uncertain. Economic activity is picking up from April lows as some economies unlock. But predicting the length and depth of the recession remains difficult.”
Europe, Latin America hardest-hit in May
IATA said in its report that all regions suffered declines in May with airlines in Europe and Latin America suffering the "sharpest drops in year-on-year growth" in total air freight volumes, while airlines in Asia-Pacific and the Middle East experienced slightly less dramatic declines.
Airlines in North America and Africa meanwhile saw more moderate drops compared to the other regions.
Asia-Pacific airlines saw demand for international air cargo fell by 21.3% year-on-year in May 2020 — showing a solid improvement over the 25.2% drop in April. IATA said seasonally-adjusted freight volumes also rebounded slightly in May and have now reached 75% of their pre-COVID-19 crisis levels. IATA said shipments of personal protective equipment (PPE) are helping support airlines in the region. International capacity decreased by 31%.
North American carriers reported a single-digit fall in international cargo demand of 9.0% year-on-year in May. This was the smallest contraction of all regions except Africa.
"The resilient performance is due to shorter and less stringent lockdowns in certain regions, the large freighter fleets of a few regional airlines as well as robust US-China trade volumes," IATA said, noting that demand on large Asia–North America route was
down only 0.4% year-on-year in May.
European carriers reported a 29.7% annual drop in international cargo volumes in May, the weakest performance of all regions due to limited manufacturing output and lockdowns through to mid-May contributed to the weak performance.
Middle Eastern carriers reported a decline of 25% year-on-year in May, a significant improvement from the 36.2% fall in April. IATA said despite a number of carriers in the region maintaining some cargo capacity, traffic on all key routes was low.
Latin American carriers also posted a 22.1% drop in year-on-year international demand. This was a significant improvement from the 40.7% decline in April.
IATA said the COVID-19 crisis is particularly challenging for airlines based in Latin America owing to strict lock-down measures.
African airlines posted the smallest contraction of any region in May, extending a run of resilient performance.
IATA said Africa has now ranked in the top two regions for 15 consecutive months. Year-on-year international demand fell by 6.3%.
The small Africa-Asia market was particularly resilient in May, down only 0.4%. International capacity decreased by 37.7%.