Global air freight markets showed improvement in demand in June, but at a slower pace than some of the traditional leading indicators, the International Air Transport Association (IATA) said in its monthly report.
Global demand fell 17.6 percent for the month compared to the previous year, a modest improvement from the 20.1 percent year-on-year decline in May. Global capacity contracted 34.1 percent, compared to a year earlier. IATA noted that this was on par with the 34.8 percent year-on-year drop in May.
Belly capacity for international air cargo dropped 70 percent in June compared to the previous year due to the withdrawal of passenger services amid COVID-19. This was partially offset by a 32 percent increase in capacity as more freighter aircraft were called into service.
At the same time, global manufacturing demand stabilized in June. The new export orders component of the Purchasing Managers Index rose 11 points compared to May, the strongest monthly increase since the series began in 1999, IATA noted, while the PMI tracking global manufacturing output rebounded in June to its highest level since January.
“Cargo is, by far, healthier than the passenger markets, but doing business remains exceptionally challenging,” Alexandre de Juniac, IATA’s director general and CEO, said. “While economic activity is re-starting after major lockdown disruptions, there has not been a major boost in demand. The rush to get personal protective equipment (PPE) to market has subsided as supply chains regularized, enabling shippers to use cheaper sea and rail options. And the capacity crunch continues because passenger operations are recovering very slowly.”
All regions recorded declines in June. Airlines in Europe and Latin America suffered the sharpest drops in year-on-year growth in air freight volume, while airlines in Asia-Pacific and the Middle East experienced slightly less dramatic declines. Airlines in North America and Africa saw more moderate drops compared to the other regions.
Asia-Pacific airlines saw demand for international air cargo fall 20 percent in June 2020 compared to the same period a year earlier. This was a slight deterioration over the 18.8 percent drop in May.
“Despite manufacturing starting to pick up in the region, demand was impacted by the reduction in shipments of PPE by air,” IATA said.
North American carriers reported an 8.8 percent decline in international cargo demand in June, the smallest contraction of all regions.
“The resilient performance is due to the large freighter fleets of a few of the region’s airlines, as well as the fiscal support to airlines in the USA from the CARES Act,” IATA said.
European carriers saw a 27.6 percent year-on-year drop in international cargo volume in June. This was a slight improvement from May’s decline of 29.5 percent, but still the second-weakest performance of all regions, IATA noted.
Middle Eastern carriers reported a decline of 19.1 percent year-on-year in the month, an improvement from the 24.9 percent fall in May.
Latin American carriers posted a 29.4 percent drop in year-on-year international demand in June–the weakest performance of all regions. IATA said the COVID-19 crisis is particularly challenging for airlines based in Latin America, owing to strict lockdown measures.
African airlines posted a 13.8 percent contraction in June, a weaker performance than the 7.3 percent decline in demand in May. The region suffered from the effects of the pandemic becoming more severe in June, according to IATA.