The International Air Transport Association (IATA) has said that most drivers of air cargo – new export orders and business confidence – have continued to improve and grow in recent months despite renewed COVID outbreaks in major economies, which has reflected in a lower inventory-to-sales ratio.
IATA stated this in its Cargo Chartbook for the fourth quarter of 2020. It declared that the industry-wide cargo tonne-kilometres (CTKs) improved over the three months to October 2020 (a 7.2% gain quarter-on-quarter versus a 0.6% fall in the previous quarter) as CTKs were still significantly (8.6%) below volumes registered over the same period in 2019.
According to the Cargo Chartbook, Asia-North America remains the strongest region, driven by e-commerce flows. Despite that, the recovery in CTKs has been hampered by the lack of bellyhold cargo capacity. Cargo yields have started to rise again, and are expected to remain high during the cargo peak season, providing a crucial source of revenues for airlines.
Under market developments, IATA noted that the industry-wide cargo tonne-kilometres (CTKs) continued to improve at a robust pace in the three months to October 2020 as volumes expanded by 7.2% quarter-on-quarter, with a strong rise in seasonally adjusted CTKs.
In the same period, CTKs were still down 8.6% year-on-year and prevented air cargo to recover the market share of global trade it lost to ocean trade earlier in 2020.
The Cargo Chartbook maintained that the Asia-North America trade has been the most resilient during the crisis, driven by e-commerce flows between China and North America. In the three months to October, traffic was up 4.2% year-on-year.
‘’Among the key drivers of air cargo, business confidence and new export orders have continued to expand in recent months. Consumer confidence also improved, but lagged behind the other two metrics, highlighting the divergence between the manufacturing and service sectors and concerns about unemployment.
‘’The inventory-to-sales ratio has also fallen significantly in the past few months as demand picked up. While this would normally be very supportive of air cargo, the lack of capacity limits the recovery in CTKs,’’ according to IATA.
Under capacity, costs and yields, between January and October 2020, industry-wide available cargo tonne-kilometres (ACTKs) fell by 24.5% year-on-year, while CTKs declined by only 12.4% in the meantime.
Cargo capacity continued to be impacted by the lack of belly capacity – as international passenger traffic did not improve much lately. Regions with the most capacity have performed better in terms of flown volumes.
Cargo yields started to increase again in October as the cargo peak season starts, leading to record-high cargo revenues which provide welcome support to overall airlines revenues.
About cargo outlook in the coming year, IATA noted that there was an upbeat as a survey carried out in early in the year to October showed that respondents were increasingly optimistic about the outlook as close to half of them expected cargo demand to grow over the coming year.
With the capacity crunch expected to disappear only slowly, around 1/3 of surveyed airlines thought that cargo yields would continue rising while almost half of them anticipated no change from currently elevated levels.