This was the largest drop in year-on-year demand since IATA started to monitor cargo performance in 1990, outpacing the 6 percent falloff in global trade in goods.
Global capacity shrank 23.3 percent in 2020 compared to 2019–more than double the contraction in demand, IATA noted. Due to the lack of available capacity, cargo load factors rose 7.7 percent in 2020. This contributed to increased yields and revenues, providing support to airlines and some long-haul passenger services in the face of collapsed passenger revenues, IATA said.
Improvements toward the end of the year were demonstrated in December, when global demand was 0.5 percent below previous-year levels. Global capacity was 17.7 percent below 2019, indicating the continuing and severe capacity crunch. With the stalling of the recovery in passenger markets, there is no end in sight for the capacity crunch, IATA said.
“Air cargo is surviving the crisis in better shape than the passenger side of the business,” said Alexandre de Juniac, IATA’s director general and CEO. “For many airlines, 2020 saw air cargo become a vital source of revenues, despite weakened demand. But with much of the passenger fleet grounded, meeting demand without belly capacity continues to be an enormous challenge. And, as countries strengthen travel restrictions in the face of new coronavirus variants, it is difficult to see improvements in passenger demand or the capacity crunch.”
Strong variations were evident in the regional performance of air cargo in 2020. North American and African carriers reported an annual gain in demand in 2020, while all other regions remained in negative territory compared to 2019.
Asia-Pacific airlines reported a decline in demand of 15.2 percent year over year and a fall in capacity of 27.4 percent. In December, airlines in the region posted a 3.9 percent decrease in international demand compared to the previous year.
“After a pause in recovery in Q3, demand is improving, driven by a rebound in manufacturing activity and export orders from China and South Korea,” IATA said.
North American carriers posted a 1.1 percent increase in demand in 2020 and a 15.9 percent fall in capacity. In December, carriers in the region posted an increase of 3.1 percent in international demand–the strongest monthly performance since late 2018.
“Strong traffic on the Asia-North America routes, which was up 2.1 percent in 2020, contributed to the performance, driven by strong demand from North American consumers for goods manufactured in Asia,” IATA said. “Capacity remained constrained, down 14.1 percent in December.”
European carriers reported a 16 percent drop in demand for the year and a 27.1 percent decline in capacity. In December, airlines posted a decrease in international demand of 5.6 percent compared to the previous year. IATA said after a pause in recovery in November, seasonally adjusted demand grew 7 percent month-on-month in December, the largest rise of all regions. However, new lockdowns and adverse economic conditions in the region risk the recovery. Lack of capacity remains a challenge, as international capacity decreased 19.4 percent in December.
Middle Eastern carriers reported a 9.5 percent decline in demand in 2020 and a fall in capacity of 20.9 percent. After a slight slowdown in recovery in November, carriers in the region performed well in December, posting a 2.3 percent increase in international demand. International capacity decreased by 18.2 percent in December.
Latin American carriers reported a decline in demand of 21.3 percent in 2020 and a 35 percent fall in capacity. In December, international cargo volumes fell 19 percent compared to the previous year. Air cargo recovery in the region has been affected by adverse economic conditions in markets such as Mexico, Argentina and Peru.
African airlines saw demand grow 1 percent in 2020 and a fall in capacity of 17.3 percent. African airlines posted the strongest international growth of all regions in 2020, as well as in December, with international demand up 6.3 percent. International capacity decreased 21.6 percent in the month.