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Air freight demand rose by 6.9% in 2021 over 2019 and 18.7% over 2020, boosted by a strong December performance and good economic conditions
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Growth opportunities, however, were lost due to the pressures of labor shortages and logistics constraints
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In December last year, rates were almost 150% above 2019 levels
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Overall, economic conditions point towards a strong 2022
The air cargo sector had a “stellar year” in 2021 as global demand soared, supported by a strong performance in December and positive economic conditions, according to the International Air Transport Association (IATA).
Global air freight demand increased by 6.9% in 2021 compared to pre-COVID 2019 levels and by 18.7% compared to 2020.
This is the second biggest improvement in year-on-year demand since the 20.6% gain in 2010, outpacing the 9.8% rise in global goods trade by 8.9 percentage points, IATA said.
Global demand in 2021 was up 6.9 % compared to 2019, with international operations improving 7.4%. Capacity was 10.9% below 2019 and below 12.8% for international operations. Capacity remains constrained with bottlenecks at key hubs, said IATA.
“Air cargo had a stellar year in 2021. For many airlines, it provided a vital source of revenue as passenger demand remained in the doldrums due to COVID-19 travel restrictions,” said Willie Walsh, IATA’s director general.
“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,” he said.
The lack of available capacity contributed to increased yields and revenues in 2021, providing support to airlines and some long-haul passenger services in the face of collapsed passenger revenues. In December last year, rates were almost 150% above 2019 levels.
Economic conditions continue to support air cargo growth, noted IATA. Global goods trade rose 7.7% in November 2021 compared to pre-crisis levels. Global industrial production was up 4.0% over the same period.
The inventory-to-sales ratio remains low. This 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.
The recent surge in COVID-19 cases in many advanced economies has created strong demand for PPE shipments, which are usually carried by air.
In December 2021, global demand rose 8.9% above 2019 levels and 9.4% for international operations, up from the 3.9% increase in November and the best performance since April 2021 when 11.4% growth was recorded. Global capacity in December last year was 4.7% below 2019 levels (‑6.5% for international operations).
Meanwhile, supply chain issues that slowed the pace of growth included 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.
Moreover, the December global Supplier Delivery Time Purchasing Managers Index (PMI) was at 38. While values below 50 are normally favorable for air cargo, in current conditions it points to delivery times lengthening because of supply bottlenecks.
December saw a relief in supply chain issues that enabled cargo growth to accelerate.
“Some relief on supply chain constraints occurred naturally in December as volumes decreased after peak shipping activity ended in advance of the Christmas holiday. 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,” said Walsh.
And overall December cargo performance was assisted by additional belly-hold capacity as airlines accommodated an expected year-end boost to travel.
Regional performance last year showed strong variations compared to 2019. North American carriers were the strongest performers, posting a 20.2% increase in international demand in 2021 compared to 2019 and a growth in international capacity of 0.2%.
This is followed by Middle East and African carriers, which also reported double digit growth. The Middle East reported an increase in international demand of 10.6% in 2021 compared to 2019 and a fall in international capacity of 10.1%.
African airlines saw international demand grow 11.3% in 2021 compared to 2019 and a fall in international capacity of 14.6%.
Asia-Pacific and European carriers reported a rise in international demand of 3.6% in 2021 compared to 2019 and a fall in international capacity of 17.1%. Demand for goods manufactured in the region remains strong, including PPE.
European carriers reported a 3.6% increase in international demand in 2021 compared to 2019 and a fall in capacity of 17.4%.
Latin American carriers reported a decline in international demand of 15.2% in 2021 compared to 2019 and a fall in capacity of 30.2%.
Photo by Colin Lloyd on Unsplash
