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Strong December Tops Off ‘Stellar’ Year for Air Cargo

Demand for air cargo surged 6.9 percent in 2021 compared to 2019 pre-Covid levels and was up 18.7 percent from 2020 following a strong performance in December, the International Air Transport Association (IATA) reported Tuesday.

This marked the second-biggest improvement in year-on-year demand, behind 2010’s 20.6 percent gain, since IATA started to monitor cargo performance in 1990, outpacing the 9.8 percent rise in global goods trade by 8.9 percent. IATA said as comparisons between 2021 and 2020 monthly results are distorted by the extraordinary impact of Covid-19, comparisons in its report are to 2019, which followed a normal demand pattern.

Air freight capacity in 2021 was 10.9 percent below 2019 and remains constrained with bottlenecks at key hubs, IATA noted. Asia-Pacific airlines reported a decline in international capacity of 17.1 percent, while North America was the only region to record capacity growth in 2021 compared to 2019.

Global demand was 8.9 percent above 2019 levels, following a 3.9 percent increase in November and the best performance since April 2021. Global capacity dipped 4.7 percent from 2019 levels. IATA said the lack of available capacity contributed to increased yields and revenues, providing support to airlines and some long-haul passenger services in the face of collapsed passenger revenues.

The report noted that inventory-to-sales ratio remains low, which is positive for air cargo as manufacturers turn to air cargo to rapidly meet demand. The cost-competitiveness of air cargo relative to that of sea-container shipping remains favorable, IATA said.

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In addition, the recent surge in Covid-19 cases in many advanced economies has created strong demand for PPE shipments, which are usually carried by air. On the other hand, labor shortages, partly due to employees being in quarantine, insufficient storage space at some airports and processing backlogs continue to put pressure on supply chains.

“Air cargo had a stellar year in 2021,” said Willie Walsh, IATA’s director general. “For many airlines, it provided a vital source of revenue as passenger demand remained in the doldrums due to Covid-19 travel restrictions. Growth opportunities, however, were lost due to the pressures of labor shortages and constraints across the logistics system. Overall, economic conditions do point towards a strong 2022.”

Walsh noted that December brought relief for supply chain issues that helped accelerate cargo growth.

“Some relief on supply chain constraints occurred naturally in December, as volumes decreased after peak shipping activity ended in advance of the Christmas holiday,” he said. “This freed capacity to accommodate front-loading of some Lunar New Year shipments to avoid potential disruptions to flight schedules during the Winter Olympic games. And overall December cargo performance was assisted by additional belly-hold capacity, as airlines accommodated an expected year-end boost to travel. As shortages of labor and storage capacity remain, governments must keep a sharp focus on supply chain constraints to protect the economic recovery.”

Strong variations were evident in the regional performance of air cargo in 2021 compared to 2019. North American carriers were the strongest performers, reporting an annual increase in international demand of 20.2 percent. Middle Eastern and African carriers also reported double digit growth in international demand in 2021 compared to 2019, while Asia-Pacific and European carriers saw international demand rise 3.6 percent in 2021 compared to 2019. Latin American carriers were the only ones to record a contraction in international demand of 15.2 percent compared to 2019.

In December, Asia-Pacific airlines posted an 8.8 percent increase in international demand compared to 2019.

“Demand for goods manufactured in the region remains strong, including PPE,” IATA said. “International capacity remained constrained in December, down 10 percent compared to the same month in 2019.”

In December, North American carriers posted a 20.5 percent jump in international demand. IATSA said the region’s carriers continue to benefit from strong consumer demand for goods. International capacity grew 6.2 percent compared to December 2019.

European airlines had a 6 percent increase in international demand last month compared to 2019. International capacity was down 5.9 percent in the month compared to pre-crisis.

“European carriers have been significantly affected by supply chain and airport congestion and localized capacity constraints,” IATA said.

Middle Eastern carriers saw a 5.7 percent gain in international demand in December compared to two years earlier. International capacity fell 9.2 percent in the comparable period.

IATA pointed out that Latin American carriers had a challenging year, as several were engaged in lengthy restructuring processes.

“That said, the restructuring processes are coming to an end and December’s performance was the best of the year, with carriers in the region reporting a 2.9 percent decline in international demand compared to December 2019,” the report added. “This was a significant improvement on the 13.4 percent decline the previous month. Capacity remained heavily constrained in December, down 26.1 percent on pre-crisis levels.”

IATA noted that growth in African air cargo has been dynamic for most of 2021, driven by the strength of the Africa-Asia route. In December, international demand grew 7.6 percent year-on-year, while international capacity fell 19.4 percent.