Air freight’s recovery cools in November
Tonnages rose, month on month, by 2.5%, and China-Europe prices were significantly higher. But reflecting ‘a fluctuating market’, China-Europe prices slipped back towards the end of the month.

Airlines’ hopes of a significant further peak-season boost in November partially failed to materialise, according to early statistics and analysis by CLIVE Data Services and TAC Index, although their figures indicate a further month-on-month rise in tonnages and higher China-Europe prices for the month as a whole.

Nevertheless, figures for the month tell a mixed picture, indicative of «a fluctuating market», with China-Europe prices slipping back towards the end of November.

New data for the four weeks ending 29 November shows that the recovery in capacity — up 3% month-on-month — slightly outpaced growth in demand, with chargeable weight increasing by just 2.5%. Overall, available capacity was 21% less than a year ago.

As a result, despite rising to 72% in the opening two weeks of November, the dynamic load factor reduced to 70% for the second half of the month which, although 5% points higher year-on-year, was still below the 8% points load factor increase in the month of October 2020.

Looking at pricing on major east-west trade lanes, TAC Index reports that air freight rates in November increased significantly, month-over-month, from Hong Kong and China to Europe — by 30% and 24% respectively. However, rates from Hong Kong to both Europe and the United States flattened towards the end of the month; and, week-on-week analyses shows China-Europe rates decreasing by around 6% towards the end of November.

Robert Frei, Business Development Director at TAC Index, commented: «This is a fluctuating market. The increase in rates is likely to be the result of airlines selling more capacity on the short-term market and forwarders securing air cargo capacity through charter arrangements. Overall, in November, we did not see the rates one would have expected based on earlier anticipation of a strong peak season.»

Looking at the recovery in demand in recent months, CLIVE noted that «from a low of −37% in April, the gap in year-on-year air cargo volumes has been steadily closing in the subsequent months to the end of October, by which time the margin versus 2019 volumes had reduced to −12%. In November, however, the gap rose slightly to −13% as the coronavirus continued to take its toll on global trade and international supply chains.»

CLIVE noted that this was the first time in six months that the gap between last year’s tonnages and this year’s tonnages had not narrowed, adding: «This validates a signal first identified by CLIVE Data Services in the final week of October 2020 when air cargo’s ‘dynamic load factor’ — calculated on both the volume and weight perspectives of cargo flown and capacity available — unexpectedly slipped by 1.5%.»

Commenting on November’s market data, Niall van de Wouw, Managing Director of CLIVE Data Services, said: "We saw a levelling off develop at the end of October which we stated (several weeks ago) might be indicative of a market which was cooling off a little, and this was indeed the case. After six months of small but encouraging improvements, the stalling of demand in November — typically a peak month when we’d expect dynamic load factor growth — could be seen as a further negative indicator.

«However, we must contrast this with the impact of lockdowns and restrictions imposed by governments to slow the second wave of Covid, especially in Europe and the US, and the corresponding disruption to business continuity and consumer confidence. Against this uncertain operating environment, the global air cargo market in November arguably showed a degree of resilience.

«The air cargo industry can also take some comfort from the positive news of successful vaccine developments and the global demand shipments of the vaccine will hopefully produce for air cargo supply chains. This will also bring more capacity to the market and hopefully coincide with a rise in consumer spending, which is hopefully a prelude to a more sustainable recovery in 2021.»

TAC Index consolidates data «shared by a representative group of international freight forwarders — a combination of global companies, SMEs, master loaders and local heroes — as it only using transactional data. Statistical filtering using the proprietary algorithms is applied to generate truly representative general cargo indices,» the organisation explained.

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