State of Logistics 2022: Air Cargo

Hopes were high that 2022 would show improvement to the air cargo industry. All of that changed when Russia invaded Ukraine and China went into a massive COVID-related lockdown. However, there are small signs of hope.

WorldACD Market Data determines that the average worldwide USD yield/rate in the first quarter of 2022 was 29% higher compared with the same quarter a year earlier. During that quarter, the year-over-year yield/rate changes (measured in USD/kg) were up +37%, +23% and +28% respectively. That trend did not change in April. In fact, the last two weeks of April showed an increase in capacity of +1% compared with the preceding two weeks.

All factors that curtailed the growth recovery in March continued to impact the industry in April with volumes at -8% year-over-year, reports CLIVE Data Services. Airfreight rates remained elevated despite airlines adding capacity on summer passenger schedules.

The conflict in Ukraine, China’s lockdown, and rising inflation contributed to the fall in demand, which CLIVE says was also likely exacerbated by staff shortages in airport handling services and manufacturing. Volumes in April were -5% compared to the same month of 2019, before the pandemic took hold.

Lower volumes in April, however, did not lead to cheaper overall airfreight rates. CLIVE reports that the +141% rise seen in March 2022 versus the 2019 level increased further in April 2022 to +145%. This was +26% above the average for April of last year.

“The rationale behind lower load factors and higher rates is the bottleneck on the ground, which appears to be caused now by not only the shortages of people handling cargo at airports around the world and the severe lack of truck drivers to move the goods, but also by a wider shortage of people for lower paid logistics jobs,” says Niall van de Wouw, CLIVE founder and Xeneta chief airfreight officer.

WorldACD shows a worldwide year-over-year weight change of -3% for March 2022 compared with March 2021, but remained stable in the last week of April. China saw -13% on outbound air cargo and -23% on inbound air cargo. Europe to and from Asia Pacific was hit hardest, with weight down -20% eastbound and -29% westbound.

The Americas did the best in March 2022 and the first quarter of 2022. North, Central and South America saw high single-digit growth figures for both outbound and inbound air cargo volumes. In the last two weeks of April, rates have increased from North America to Asia Pacific (+10%), and Central & South America to North America (+6%).

CLIVE reports that the dynamic load factor, in which it calculates both weight and volume perspectives of cargo flown and capacity available, averaged 70% in April 2022 from Europe to North America. That was a drop of 12 percentage points in just one month, and the first time in two years it’s fallen below 80%.

“This was caused by a big jump in North Atlantic passenger capacity as airlines stepped up their summer schedules,” says van de Wouw. “During the last week of March, capacity increased by 15% compared to the previous week.”

Added capacity “takes some of the heat out of the supply/demand market,” says van de Wouw, “and potentially lead to a downward pressure on rates.” For these reasons, he forecasts that the North Atlantic market will most likely be the first to return to some kind of normal.

“In terms of the dynamic load factor, we’re seeing this shift starting to happen as we move from a seller’s market to a buyer’s market for air cargo,” adds van de Wouw. “However, the issues on the ground might delay the buyer’s market a bit longer.”
 

Global Dynamic load factor in April was 9% points lower than in 2021

April 2022 global air cargo volumes, capacity load factor and rates developments (weeks 14-17 of 2022 compared to same weeks in 2021 and 2019)