Some Good News as Analysts Study Improved Air Cargo Figures

WORLDWIDE – Amongst all the doom and gloom engulfing the air transport industry two companies which analyse the sector have a positive spin to add to the dialogue. Analysts CLIVE Data Services and TAC Index say the signs are the global air cargo market has been edging towards a sustainable recovery at the start of this, the traditional peak season.

The factors the pair say are driving this are a record ‘dynamic load factor’ coupled with high airfreight rates on the world’s premier trade lanes in September. Chargeable weight in September rose 9% points month-on-month, further narrowing the year-on-year gap to -15%, the fifth consecutive month of positive indicators since April 2020’s 37% decline in volumes versus the same month of 2019.

CLIVE Data Service’s ‘dynamic load factor’, based on both the volume and weight perspectives of cargo flown and capacity available, averaged 70% in September, a 2%-point increase as against August 2020 and 8% points higher year-over-year. Notably, the 71% figure for the week of Sep 28-Oct 4 was the highest ever recorded by the company.

Constrained capacity in the market at a time of rising demand also led to significant increases in rates, capacity in September was, according the TAC Index, on average 25% less than in the same month of last year, presumably due to the loss of belly hold space on the multitude of cancelled passenger flights. Robert Frei, Business Development Director at TAC Index said:

“It is interesting to see how closely demand/volume and pricing correlate in light of the fact there are a lot less BSAs (Block Space Agreements) in place currently. There were steady increases in pricing week-over-week in September, with rates on lanes from China/Hong Kong to the EU in the last week of September 8% higher than in the last week of August.”

Latest CLIVE Data Service and TAC Index analyses of the dynamic load factor and airfreight rates on trans-Atlantic routes reported even higher gains. The elevated load factor for westbound volumes rose to 84% in September, up 18 percentage points versus September 2019, while the eastbound dynamic load factor was 67%. Corresponding westbound and eastbound airfreight rates rose 170% and 73% respectively over the same period of last year. Niall van de Wouw, Managing Director of CLIVE Data Services, observed:

“A fifth consecutive month of gradual air cargo market improvements may not be sensational news but, in this case, sometimes boring is good. In fact, our latest weekly analyses reveal more positivity than I would have expected based on the global impact of government actions to restrain the spread of Covid-19. The air cargo market seems to be quite resilient. In April, CLIVE stated that the industry’s downward performance was ‘bottoming out’ and this has proven to be correct, with month-over-month improvements ever since.

“While this might be encouraging news for airlines, it means shippers and forwarders are being faced with higher airfreight costs. Uncertainty over how the market will develop alongside very high load factors is a toxic combination for the buyers of airfreight capacity.

”If this demand persists, and shippers are prepared to pay, we may well see a resurgence in passenger planes being deployed mainly or solely for moving freight. These remain uncertain times but with more optimism in the market for October and November volumes, the question is, how far can the recovery go?”

CLIVE statistics read the factors differently to traditional analyses, its dynamic load factor includes the cube of cargo, as opposed to weight only estimates. It is based on the fact that airlines’ cargo capacity nearly always ‘cube out’ before they ‘weigh out’ as a result of an aircraft’s higher capacity density (available kilogrammes per cubic metre) than the average density of the goods moved by air.

TAC Index is based on consolidating data shared by a group of international freight forwarders. Statistical filtering using the proprietary algorithms is applied to generate what it claims are truly representative general cargo indices.

Photo: Courtesy TAC Index.