Air cargo bounce back slackens in early November

11.23.2020

Air cargo’s steady recovery in recent months showed signs of slackening in the first half of November, a tell-tale sign being that yields/rates from China dropped for the first time in many weeks, the latest data from WorldACD shows.

Worldwide, the kilograms transported in the period 1-15 November (H-1 Nov) stood at 48% of the total for the whole of October (from Asia Pacific 51%, Europe and North America 47%, Central and South America 46%, Middle East & South Asia (MESA) 44%, and Africa 42%), it noted.

«In other words, any month-over-month (MoM) growth in November will have to come from the second half of the month. Weekly volumes in H-1 Nov were more or less the same as in the last week of October.»

While worldwide yields/rates (per kg) continued their upward movement, here too there was a slowdown in growth — the average going from US$3.13 in the last week of October to US$3.25 in the first week of November, an increase of 3.9% week-on-week (WoW) to US$3.28 in the second week of November (+0.9% WoW).

«For the first time in many weeks, yields/rates from China dropped. Whilst they were up by 3.8% WoW in the first week of November, in the second week they were down by 2.5% WoW,» WorldACD revealed.

On the China-Asia Pacific trade lane they decreased by 9.5% (to US$ 2.20/kilo), fell by 0.9% from China to Europe (to US$ 5.08/kilo) and shed 6% on China-North America routes (to US$ 5.93/kilo).

«Incoming business into Asia Pacific saw a downward trend: yields/rates dropped by 0.8% WoW on average, whilst this figure was slightly up for all other destination regions.

The average load factors were slightly lower in H-1 Nov than in October. We did not see a WoW change in last week’s (seccond week of November) data, except for the load factors ex-Europe which went up by more than 1.5 percentage points.

As for the key takeaways from the market last month, volumes were «only» 11% below October 2019, but 8% above September 2020.

«Worldwide air cargo contracted by one-third year-over-year (YoY) in April 2020. Since that very steep decline, the sector has bounced back steadily,» WorldACD underlined..

«Airline revenues from air cargo (in October) kept rising: +48% YoY, thanks to a still very high price per/kg, which has hovered between 60% and 67% above last year (in US$) for the past four months, culminating in an October increase of 66% YoY and 4.3% MoM.

«All this happened with freighter capacity increasing by 5% MoM, whilst cargo capacity on passenger aircraft grew by 11% MoM. The load factors for the two aircraft types increased by a modest 2% and 1% respectively over the month of September.»

WorldACD reported that among the three largest regions, the origin Asia Pacific did best again in volume in October, falling 7% YoY, but recording the second-highest YoY increase of price/kg (+82.4%). The origin area Middle East & South Asia (MESA) almost doubled its prices for the month of October YoY. The MoM price increase ex-Asia Pacific was 9.4% against a worldwide average of 4%: in 2019 the MoM increase ex-Asia Pacific was 5.5%.

«For the first 10 months of the year, Asia Pacific was the only region keeping its YoY volume loss in single figures (-9.8%), coupled with a record YoY revenue increase of 59%, more than double the worldwide average of 29%. Most striking is the fact that the share in worldwide air cargo revenues, generated from business originating in the Asia Pacific countries, has gone up from 41% in 2019 to 50% in 2020.»

The chart below shows how the world’s top-50 air cargo markets performed (MoM) (yield/rates in US$/kg). The markets between Western Europe and Mexico stand out, WorldACD observed.

Analytics on topic
Report
01.27.2021
Report
01.27.2021
Climate Action Pays Off in Transportation and Logistics

T&L companies that are pursuing tangible plans to reduce emissions have generated superior total shareholder return, according to BCG analysis. But to ensure economic sustainability, T&L players should move quickly to incorporate environmental sustainability into their business model and long-term strategies

Article
09.13.2021
EU wants to tax aviation fuel and phase out polluting cars by 2035
The European Commission has announced plans to cut greenhouse gases from the transport sector by 90% by 2050 in order to meet the goals of the European Green Deal.