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Air Cargo Suffers Rapid Descent in March as Capacity Crunch Tightens

Air cargo saw a severe capacity shortfall in March, according to new data and warnings from an industry group.

Global air cargo demand fell 15.2 percent last month compared to March 2019, while global capacity nosedived 22.7 percent, the International Air Transport Association (IATA) said. So-called “belly capacity” for international air cargo shrank 43.7 percent in the month compared to the previous year, but was partially offset by a 6.2 percent increase in capacity through expanded use of freighter aircraft, including the use of passenger aircraft, idle from cancelled flights over the coronavirus pandemic, for all-cargo operations.

“At present, we don’t have enough capacity to meet the remaining demand for air cargo,” Alexandre de Juniac, IATA’s director general and CEO, said.

De Juniac said the gap between capacity and volume “must be addressed quickly because vital supplies must get to where they are needed most.” For example, he said there is a doubling of demand for pharmaceutical shipments that are critical to this crisis.

“With most of the passenger fleet sitting idle, airlines are doing their best to meet demand by adding freighter services, including adapting passenger aircraft to all-cargo activity,” de Juniac said. “But mounting these special operations continues to face bureaucratic hurdles. Governments must cut the red tape needed to approve special flights and ensure safe and efficient facilitation of crew.”

There are still too many examples of delays in getting charter permits issued, a lack of exemptions on COVID-19 testing for air cargo crew, and inadequate ground infrastructure to and from and within airport environments, he noted.

Air cargo needs to move efficiently throughout the entire supply chain to be effective, IATA stressed. It urged governments to cut the paperwork for charter operations, exempt cargo crew from quarantine rules that apply to the general population and ensure there is adequate staff and facilities to process cargo efficiently.

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IATA said while there is an immediate capacity shortage, the collapsing global economy is expected to further depress overall cargo volumes. Short-term analysis shows that global manufacturing activity continued to contract in March, as government-imposed lockdowns caused widespread disruptions, IATA monthly report noted.

Looking at the prospects for the rest of 2020, the World Trade Organization forecast a best-case scenario of a 13 percent decline in global trade in 2020, while the worst-case is for a 32 percent fall, which would deeply impact air cargo’s prospects, IATA said.

“The capacity crunch will, unfortunately, be a temporary problem,” de Juniac said. “The recession will likely hit air cargo at least as severely as it does the rest of the economy. To keep the supply chain moving to meet what demand might exist, airlines must be financially viable. The need for financial relief for airlines by whatever means possible remains urgent.”

Asia-Pacific airlines saw demand for international air cargo fall 15.9 percent in March year over year. Seasonally adjusted cargo demand fell 3 percent compared to February to levels last seen in the third quarter of 2013.

North American carriers reported a 13.3 percent decline in international demand last month, which was more than double the pace of decline in February. Cargo volumes on the Europe-North America trade lane were affected the most, down 22 percent year-on-year.

European carriers reported an 18.8 percent annual drop in international cargo volumes in March, much deeper than the 5.2 percent falloff for February. Intra-Europe demand declined 32.6 percent year-on-year due to widespread shutdowns in the manufacturing sector across the region. The larger Europe-North America and Europe-Asia markets also recorded substantial declines for the month.

Middle Eastern airlines reported a decline of 14.1 percent year-on-year following growth of 4.3 percent in February. Among all routes to and from the Middle East, the sizeable Europe and Asia trade lanes recorded falls of around 20 percent each, while the smaller Africa market saw a decline of around 30 percent.

Latin American carriers posted the sharpest fall–a 19.3 percent year-on-year decline in international demand. Declines were widespread but most severe for Central-South America.

African airlines, less affected by disruptions in March, saw year-on-year growth in international demand fall 1.2 percent. The Africa-Asia market was the only trade lane that continued to post growth in March, with volumes up almost 10 percent year-on-year.