Current airfreight market is all about capacity not demand, says analyst

Date Added: 8 September 2021

With a strong presence in the airfreight arena through our subsidiary Davies Turner Air Cargo, we note that according to CLIVE Data Services’ latest airfreight market analysis, the “resilient” international demand for air cargo capacity in August, versus a shortfall in supply, pushed average global air cargo rates up 112% on their pre-Covid levels.

Airfreight rates continued to climb past pre-Covid levels in August, as a strict local lockdown in Vietnam and the closure of cargo terminals at Shanghai Pudong International Airport highlighted the “fragility” of supply chains.

According to the analysis, air cargo volumes in August 2021 were up 1% on pre-Covid levels (August 2019), and up 19% on August 2020.

Meanwhile, capacity in August this year was 16% below the level seen in August 2019.

The analyst said that even before the latest disruptions in Pudong and Vietnam, air cargo capacity was already tight due to fewer international passenger flights, with very full flights elevating rates significantly on prime intercontinental trade lanes.

It added that rising demand is also being driven by the number of retailers having to pivot from traditional ocean freight-based supply chains to air cargo to replenish stock levels in time for their peak sales season.

CLIVE’s latest analyses indicates that the impact on ground operations in Shanghai, contributed to a 10% drop in volumes from China to Europe in the last two weeks of August, while westbound capacity was reduced by 18%. As a result, spot rates increased by nearly 20% in the last week of August compared with the last week of July.

In telling comments, the analyst added that the problem for the air cargo industry is capacity, not demand. Whilst demand is solid, it is currently relying on a scarce and fragile infrastructure.

It concludes that whilst shippers want to see more cargo capacity from the return on airline passenger operations, some signals suggest this may get pushed back again on intercontinental routes following the recent EU recommendation to pause on all non-essential travel from the USA to Europe.

In the latest IATA/CASS league table for 2020, Davies Turner Air Cargo was pleased to become the UK’s highest placed independent freight forwarder, measured by CASS airline tonnage. For more information about our global airfreight services, contact [email protected] or visit https://www.daviesturner.com/air-freight

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