Air Cargo posts strongest first half-hear growth since 2017

The International Air Transport Association (IATA) released data for global air cargo markets for June showing a 9.9% improvement on pre-COVID-19 performance (June 2019). This pushed first half-year air cargo growth to 8%, its strongest first half performance since 2017 (when the industry posted 10.2% year-on-year growth).Global demand for June 2021, measured in cargo ton-kilometers (CTKs), was up 9.9% compared to June 2019.

Regional variations in performance are significant. North American carriers contributed 5.9 percentage points (ppts) to the 9.9% growth rate in June. Middle East carriers contributed 2.1 ppts, European airlines 1.6 ppts, African airlines 0.5 ppts and Asia-Pacific carriers 0.3 ppts. Latin American carriers did not support the growth, shaving 0.5 ppts off the total.

Overall capacity, measured in available cargo ton-kilometers (ACTKs), remained constrained at 10.8% below pre-COVID-19 levels (June 2019) due to the ongoing grounding of passenger aircraft. Belly capacity was down 38.9% on June 2019 levels, partially offset by a 29.7% increase in dedicated freighter capacity.

Underlying economic conditions and favorable supply chain dynamics remain highly supportive for air cargo:

The U.S. inventory-to-sales ratio is at a record low. This means that businesses have to quickly refill their stocks, and typically use air cargo to do so. The Purchasing Managers Indices (PMIs) – leading indicators of air cargo demand – show that business confidence, manufacturing output, and new export orders are growing at a rapid pace in most economies. Concerns of a significant consumer shift from goods to services have not materialized. The cost-competitiveness and reliability of air cargo relative to that of container shipping has improved.

The average price of air cargo relative to shipping has reduced considerably and scheduling reliability of ocean carriers has dropped. In May it was around 40% compared to 70-80% prior to the crisis. (As comparisons between 2021 and 2020 monthly results are distorted by the extraordinary impact of COVID-19, unless otherwise noted, all comparisons to follow are to June 2019 which followed a normal demand pattern.)