The analysis for August 2021 shows volumes are up 1% on 2019, but capacity is down 16%. Average rates are up 112% following a local lockdown in Vietnam and the closure of cargo terminals at Shanghai Pudong International Airport.
Niall van de Wouw, Managing Director of CLIVE says that even before the disruption in Vietnam and China, air cargo capacity was tight due to fewer international passenger flights, elevating rates on prime trade lanes. Retailers are also moving from ocean freight to air cargo to replenish stock in time for peak sales seasons.
CLIVE’s analysis shows that disruption in Shanghai contributed to a 10% drop in volumes from China to Europe in the last two weeks of August and capacity was down 18%, pushing spot rates up almost 20% in the last week of August compared to the last week of July.
Van de Wouw says that air cargo demand is solid but based on scarce and fragile infrastructure, as proven by the closure of Pudong’s cargo operations.
He says: “When something like this happens at what is the world’s third largest cargo airport, it only reflects how fragile things are for global supply chains and the immediate impact on rates which were already high.”
He adds that shippers want more cargo capacity but with following EU recommendations against all non-essential travel from the US to Europe, this will not come from belly capacity any time soon.
“Airlines want and need passengers back and I suspect airline cargo departments are anxious to see this too because of the pressure they are under to generate revenue – but even when cargo revenues double, if passenger revenues are down 80%, it’s not a sustainability situation for passenger airlines,” he comments.