Global air freight demand last year registered its steepest decline in demand since the International Air Transport Association (IATA) started to monitor cargo performance in 1990, the industry group reported Wednesday. Data released data for global air freight markets air cargo demand decreased by 10.6 percent in 2020 compared with a year earlier, outpacing a 6 percent fall in the global trade of goods.
Nevertheless, in response to the ongoing Covid pandemic, the air cargo industry saw increasing yields due to a 23.3 percent reduction in global capacity due to a severe reduction in belly space in passenger airplanes. The drop in available cargo tonne-kilometers (ACTKs) amounted to double the contraction in demand, said IATA.
The lack of available capacity saw cargo load factors rise 7.7 percent; the resulting increased yields and revenues helped support airlines and some long-haul passenger services amid collapsed passenger revenues.
The industry saw improvements towards the end of the year, when in December global demand ended 0.5 percent below previous-year levels while capacity fell 17.7 percent. “That is much deeper than the contraction in demand, indicating the continuing and severe capacity crunch,” said IATA in a statement. “With the stalling of the recovery in passenger markets, there is no end in sight for the capacity crunch.”
With economic conditions improving as the industry entered 2021, the new export orders component of the manufacturing Purchasing Managers’ Index (PMI) entered growth territory in both developed and emerging markets. Global industrial production has also recovered, said IATA.
“Air cargo is surviving the crisis in better shape than the passenger side of the business,” explained IATA director general Alexandre de Juniac. “For many airlines, 2020 saw air cargo become a vital source of revenues, despite weakened demand. But with much of the passenger fleet grounded, meeting demand without belly capacity continues to be an enormous challenge. And, as countries strengthen travel restrictions in the face of new coronavirus variants, it is difficult to see improvements in passenger demand or the capacity crunch. 2021 will be another tough year.”
Relative to the passenger segment, the air cargo industry emerged from 2020 in good condition. Airlines registered their sharpest passenger traffic decline in aviation history, falling by 65.9 percent compared with 2019’s levels. Meanwhile, forward bookings have fallen sharply since late December.