False hopes: Air Cargo volumes dip 4% in May after months of positive growth

April’s air cargo volumes give false hope of faster recovery to the industry, clarifies the latest industry volume, load factor, and rates analysis by CLIVE Data Services and TAC Index.

As per the data presented by the company, the global air cargo demand in May 2021 registered a 4 percent drop in demand as compared to the pre-Covid level in 2019. 

CLIVE Data reasons the April uptick with the “Continued market uncertainties and (extended) public holidays”.

The company said that May 2021 data showed a less favorable trend as compared to the positive indicators exhibited by the sector in the first four months, with the fall in demand joined by a second consecutive month-over-month drop in dynamic load factor and air freight rates, which peaked in early May, falling away towards the end of the month.

To get a clearer perspective on whether the May public holidays disruption is the cause of the dip or the positive figure of April created false hope for sustainable growth recovery, the global air cargo industry will now have to wait until the publication of June 2021 market data. 

There were several (extended) public holidays in May which were not present in May 2019 (China, Russia and Eid al-Fitr at the end of the Ramadan) which will have negatively impacted the monthly growth rate. 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. There are signals in May’s data that may be a cause for concern – particularly the -9% decline in air cargo volumes ex Europe versus May 2019 – but it’s certainly far too soon to tell if we are seeing a structural change in the recovery of the last few quarters. Nonetheless, there are several indicators in May that the path of growth may be slowing.”

~ Niall van de Wouw, managing director of CLIVE Data Services

CLIVE’s dynamic load factor for May of 69 percent – based on analysis of both the volume and weight perspectives of cargo flown and capacity available – was 7 percent higher than in 2019, although this also presented falls of 2 percent points and 4 percent points versus April and March 2021.

The available capacity in May 2021 was down 21 percent compared to the level of May 2019, showed the CLIVE Data. Indicating that the gap in airline capacity is increasing as compared to pre-pandemic market conditions following the -18 percent figure in April and -14 percent for March.

When compared with the data of 2020, May 2021 data show 41 percent growth in chargeable weight, a 42 percent rise in available capacity, and a 1 percent increase in dynamic load factor.

The Month of May also saw an uptick in the airfreight rates, which as per the TAC Index are in line with still elevated load factors because of the capacity reduction in the market. However, it also shares that a downturn in prices is also seen on key trade lanes in recent weeks.

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. The BAI (Baltic Air Freight Indices) increased by 3 percent in May over April, but this is marked slowdown on the 17 percent growth seen in April-over-March.”

~ Gareth Sinclair of TAC Index

“Pricing strength continues to be seen ex-China and Hong Kong to the US and Europe and from Europe to the US with all 3 trade lanes seeing price increases in May over April, although prices peaked in early May and have fallen away in recent weeks. Even so, the airfreight market continues to be strong, particularly CN/HK to the US, and is likely to continue for some time as demand in several markets continues to outstrip supply as e-commerce traffic increases and economic activity strengthens in many markets,” he added.

As per the TAC Index, the prices in the US to Europe were showing a downward trend in May over April levels, however, in the last 2 weeks, they did start to rise of the month after an almost continuous decline since late March. 

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