Since air cargo developments started to completely go “off the charts” in March 2020, every month the question arises whether the next month will be a bit more normal, whatever ‘normal’ may mean. Going by the worldwide month-over-month (MoM) figures for July, one could be tempted to answer positively: July’s volume was 8.2% above June’s, while last year’s July figure was 5.5% MoM. However, the July-volume was also down by 18.5% year-over-year (YoY). At the same time, the price of air cargo per kg was 62% higher YoY, but dropped by 9% MoM, from 3.12 USD to 2.83 USD. For the first time since, the combined airlines’ air cargo revenues slightly dropped.
So, are things getting a bit more normal? One of the other pointers to find the answer, is to be found in capacity data. There is such a lack of capacity in the market that ‘normality’ still seems a long way off. Take the gap between the huge capacity drop, measured in Available Ton Kilometers (ATK), and the much smaller drop in cargo transported, measured in Freight Ton Kilometers (FTK): the gap was only 1 percentage point MoM, but over 20 percentage points YoY. The MoM change of the worldwide load factor was +1%, but with clear differences between freighters (+3%) and passenger aircraft (-8%). Though pointing to a fairly balanced change in both capacity and traffic between June and July, the overall gap still hints at a worldwide market trying to find a new footing: ‘normality’ will not seem what it used to be.
To individual market players, however, much more important than worldwide trends, are of course the developments in their own main markets. Here we see big differences.
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The origins Europe and MESA (Middle East & South Asia) added most kilograms to their June figures (+13% resp +14%), whereby Europe managed to keep its prices reasonably stable (-2.5% MoM). Asia Pacific was the region performing least in MoM percentual changes: a 6% volume growth was accompanied by a 14.4% drop in USD prices per kg.
Business from China has captivated the air cargo world more than ever since the start of the COVID-19 crisis. Coupled with a lack of capacity, this business has indeed attracted very high prices. Yet, the sky-high prices posted on the internet as so-called evidence of what happens in the China market, are often based on limited numbers of shipments (sometimes even ‘one-offs’), and therefore at best “anecdotal evidence”. This needs to be put in perspective.
WorldACD noted the following changes in Asia in July since top-dollars were charged in May 2020:
• prices (in USD/kg) from Asia Pacific as a whole fell by 41%, from 5.71 to 3.38;
• prices ex-China dropped by 53%, from 7.80 to 3.63;
• prices ex North-East Asia lost 32%, falling from 4.66 to 3.19;
• prices from South Asia fell by only 13%, and now stand at 3.84 USD/kg, i.e. at the highest region-to-worldwide level…
Most of the pricing frenzy of the past months bypassed the Americas and Africa, where monthly deviations were much more measured than in other parts of the world.
Revenues from air cargo in USD rose MoM by 10% for business originating in Europe, by 9% from Africa, by 6% from MESA, by 3% from Central & South America, but it fell by 1% from North America and by 9% from Asia Pacific.
In times of supply chain disruptions, as experienced strongly this year, there is always talk about the need to shorten the chains in order to become less dependent on events that business cannot influence. Whilst plans may be made, our figures for the year so far do not show any trend toward near-shoring yet.
Lastly, taking a first preliminary view of the month of August, the first full week of the month showed a -0.3% volume drop week-over-week, and a 2% drop in worldwide prices. Having said that, prices ex-China seem to go up again, whilst prices from South Asia dropped…
