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Supply Chain Disruptions Cut Into November Air Cargo Growth

Global air cargo demand was up 3.7 percent in November versus two years earlier, significantly behind the 8.2 percent growth seen in October and in previous months, the International Air Transport Association (IATA) reported Wednesday.

Air cargo capacity was 7.6 percent below November 2019 and relatively unchanged from October. Capacity remains constrained with bottlenecks hampering key hubs, IATA said. As comparisons between 2021 and 2020 monthly results are distorted by the extraordinary impact of Covid-19, comparisons in the monthly report were made to November 2019, which followed a normal demand pattern.

IATA said supply chain disruptions and capacity constraints impacted demand, despite economic conditions remaining favorable for the sector. IATA said labor shortages, partly due to quarantining employees, insufficient storage space at some airports, and processing backlogs exacerbated by the year-end rush created supply chain disruptions. Several key airports, including New York’s JFK, Los Angeles and Amsterdam Schiphol reported congestion.

The report also noted continued strong consumer demand and a persistently low inventory-to-sales ratio. These are positive for air cargo, as manufacturers look to shipping by planes to quickly meet demand. In addition, the recent surge in Covid-19 cases in many advanced economies has created highs demand for personal protective equipment (PPE) shipments usually carried by air.

“Air cargo growth was halved in November compared to October because of supply chain disruptions,” IATA director general Willie Walsh said. “All economic indicators pointed toward continued strong demand, but the pressures of labor shortages and constraints across the logistics system unexpectedly resulted in lost growth opportunities. Manufacturers, for example, were unable to get vital goods to where they were needed, including PPE. Governments must act quickly to relieve pressure on global supply chains before it permanently dents the shape of the economic recovery from Covid-19.”

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To relieve supply chain disruptions in the air cargo industry, IATA is calling on governments to ensure that air crew operations are not hindered by Covid-19 restrictions designed for air travelers, and to implement the commitments governments made at the ICAO High Level Conference on Covid-19 to restore international connectivity, including for passenger travel. This will ramp up vital cargo capacity with “belly” space in passenger aircraft.

In addition, they should provide innovative policy incentives to address labor shortages where they exist, and support the World Health Organization/International Labor Organization Action Group being formed to assure freedom of movement for international transport workers.

Looking at November regional performance, Asia-Pacific airlines saw international air cargo volume increase 5.2 percent in November compared to the same month in 2019. This was only slightly below the previous month’s 5.9 percent expansion. International capacity in the region eased slightly in November, down 9.5 percent compared to 2019.

North American carriers posted a comparable 11.4 percent lift in international cargo volumes in the month, significantly below October’s 20.3 percent increase.

“Supply chain congestion at several key U.S. cargo hubs has affected growth,” IATA said, adding that international capacity was down 0.1 percent from November 2019.

European carriers saw a 0.3 percent rise in international cargo volumes in November compared to the same month in 2019, but this was a significant drop in performance compared to October. European carriers have been affected by supply chain congestion and localized capacity constraints, IATA noted. International capacity was down 9.9 percent in November compared to pre-crisis levels and capacity on the key Europe-Asia route fell 7.3 percent during the same period.

Middle Eastern carriers experienced a 3.4 percent increase in international cargo volumes in November, a significant drop in performance compared to the previous month. This was due to a deterioration in traffic on several key routes such as Middle East-Asia, and Middle East-North America. International capacity was down 9.7 percent from November 2019.

Latin American carriers reported a decline of 13.6 percent in international cargo volumes in November compared to the 2019 period. This was the weakest performance of all regions and a significant deterioration from the previous month’s performance. Capacity in November was down 20.1 percent from pre-crisis levels.

African airlines’ saw international cargo volumes pick up 0.8 percent in November, down from a 9.8 percent gain the previous month. International capacity was 5.2 percent lower than pre-crisis levels.