Securing capacity for global air shipments has become more difficult this year as total freight volumes receded and as carriers reduced their flights as a way to offset that drop in volume.
Blame the global pandemic, economic downturn, and persistent supply chain interruptions with making it increasingly difficult for shippers to get their high-value, urgent shipments from point A to point B on time and within budget.
The latter is a particular concern for shippers that rely heavily on air freight. “The release of new iPhones, Sony PlayStations, and other consumer electronics during the holiday shopping season promises to soak up all available air cargo capacity,” JOC predicts, “and push rates to levels seen during the rush for pandemic-linked medical supplies in the second quarter.”
What’s Driving the Trend?
According to IATA’s most recent Air Cargo Market Analysis, August 2020 air cargo traffic is “recovering slowly amid insufficient capacity.” Total volume fell by 12.6% year-over-year in August, IATA reports, noting that seasonally-adjusted volumes are on a “soft upward trend,” but that they still remain far below 2019’s levels.
“Timely indicators of economic activity–such as manufacturing output and new export orders–have displayed robust signs of recovery in recent months,” IATA points out, “despite elevated global new cases of COVID-19.”
Still, air cargo capacity remains insufficient, with industrywide available cargo tonne-kilometres (ACTKs) declining by 29.4% in August. “International belly capacity is still scarce,” IATA reports, “and airlines have not been able to raise dedicated freighters capacity as much as needed.”
Looking ahead, IATA says that while seasonality has been muted so far since the start of the global pandemic the standard peak season for air cargo will kick off in the coming weeks and may drive increased volumes.
Trade Volume Fluctuations
IATA is tracking different air freight trends across global markets right now. In Africa, for instance, ACTKs increased by about 1% in August (compared to August 2019), after seeing a 3% drop in July. It says both North America and the Middle East are proving to be resilient markets, with carriers based in the former seeing a 4% year-over-year increase in international cargo volumes in August.
Middle Eastern cargo carriers also saw some improvement in August, when ACTKs fell by 6.8% year-over-year. “This was a significant improvement from the decline in July (-15.1%),” IATA points out, noting that local airlines in the region have been adding capacity.
Asian markets continue to struggle under the pressures of COVID-19 and supply chain problems. IATA says demand for cargo capacity in Asia fell 18.3% in August—similar to the July drop. “Demand is robust on trade lanes between Africa and North America,” IATA concluded, “but is weak within Asia and to/from the Southwest Pacific.”
Connecting the Dots
To help even out some of these fluctuations and get the capacity they need, companies are turning to reliable logistics providers to help “connect the dots” between the shipments and available capacity.
In September, for example, DB Schenker expanded its own air charter operation in response to the tightening of air freight capacity. Its new global flight operations program is connecting Beijing, Shanghai, Zhengzhou, and Hong Kong to Chicago and Frankfurt 10 times a week with exclusive full charter flights.
The new offering creates reliable cargo options for DB Schenker’s customers exporting from China. “In China, the majority of the manufacturers have recovered to normal,” Martin Habisreitinger, vice president airfreight, DB Schenker Greater China, told Aircargo News.
“With the Covid-19-pandemic still not under control worldwide, we do not expect passenger flights and belly capacity to return to the market within the next 12 months,” Habisreitinger continues. “The instability and insufficient supply within the capacity market have become a bottleneck for our customers.”
The new operation connects Shanghai and Frankfurt three times a week, Beijing and Frankfurt once per week, Zhengzhou and Frankfurt once per week, Hong Kong to Frankfurt twice per week, and Shanghai to Chicago three times per week.
In addition to these regular exclusive full charter flights, DB Schenker also provides partial charter flights, connecting Hong Kong to Frankfurt twice a week, Hong Kong to Los Angeles three times per week, and Hong Kong to Chicago once per week.
Keeping the Global Economy Moving
As the world’s air freight markets continue to adjust to the “new normal” operating environment, we’ll continue to see more innovative approaches being tested out in the marketplace. With total passenger air traffic at a minimum right now, for example, commercial passenger airlines are finding ways to add more cargo plane capacity.
“In the month of September, we’re planning on having 1,000 dedicated cargo charter flights with no passengers, just belly cargo, and serving some really important markets,” American Airlines President Robert Isom said at a recent conference.
These capacity additions may help shippers not only make it through the holiday season, but also begin planning more effectively for 2021. “The peak season for air cargo will start in the coming weeks,” said Alexandre de Juniac, IATA’s Director General and CEO, in a press release, “but with severe capacity constraints shippers may look to alternatives such as ocean… to keep the global economy moving.”