Air cargo volumes hammered by Ukraine conflict, Omicron: IATA
Cargo volumes of European airlines and Asia-Pacific carriers fell 11.1% and 5.1% year on year, respectively, due to the war in Ukraine, labor shortages and lower manufacturing activity in Asia due to Omicron, IATA says in an update
Capacity in Europe fell 4.9% as a result of the Russia-Ukraine war.
In Asia-Pacific, capacity fell 6.4% y-o-y. The zero-COVID policy in mainland China and Hong Kong is impacting performance
IATA says the Ukraine war and Omicron’s spread in Asia have driven up energy costs, aggravated supply chain disruptions, and fed inflationary pressure
Global air cargo markets saw demand drop in March, causing an 11.1% year-on-year volume contraction for European carriers, the weakest of all regions, and a 5.1% squeeze for Asia-Pacific airlines, as the Russia-Ukraine war and Omicron in Asia took their toll on the industry.
North American carriers reported 0.7% y-o-y dip in March cargo volumes, as demand in the Asia-North America market fell significantly, with seasonally adjusted volumes falling 9.2%, the Geneva-based International Air Transport Association said in a press update on May 3.
IATA said the market within Europe fell significantly, down 19.7% month on month, mainly due to the war in Ukraine. Labor shortages and lower manufacturing activity in Asia due to Omicron also affected demand, resulting in a 4.9% y-o-y drop in capacity in March.
“Air cargo markets mirror global economic developments. In March, the trading environment took a turn for the worse. The combination of war in Ukraine and the spread of the Omicron variant in Asia had led to rising energy costs, exacerbated supply chain disruptions, and fed inflationary pressure,” IATA director-general Willie Walsh said.
“As a result, compared to a year ago, there are fewer goods being shipped – including by air. Peace in Ukraine and a shift in China’s COVID-19 policy would do much to ease the industry’s headwinds. As neither appears likely in the short term, we can expect growing challenges for air cargo just as passenger markets are accelerating their recovery,” Walsh said.
In Asia-Pacific, available capacity fell 6.4% y-o-y, the largest drop of all regions. IATA said the zero-COVID policy in mainland China and Hong Kong is impacting performance.
Demand in the Asia-North America market declined significantly, with seasonally adjusted volumes falling 9.2% in March. Capacity grew 6.7% y-o-y.
IATA said global demand, measured in cargo ton-kilometers (CTKs), fell 5.2% compared with March 2021. For international operations, the decline in demand was 5.4%.
Capacity was 1.2% above March 2021, with international operations adding 2.6%. While this is in positive territory, it is a significant decline from the 11.2% y-o-y increase in February, IATA said. Asia and Europe experienced the largest falls in capacity, it added.
IATA said several factors in the operating environment should be noted:
The war in Ukraine led to a fall in cargo capacity used to serve Europe as several airlines based in Russia and Ukraine were key cargo players. Sanctions against Russia led to disruptions in manufacturing. And rising oil prices are having a negative economic impact, including raising costs for shipping.
New export orders, a leading indicator of cargo demand, are now shrinking in all markets except the US. The Purchasing Managers’ Index (PMI) indicator tracking global new export orders fell to 48.2 in March. This was the lowest since July 2020.
Global goods trade has continued to decline in 2022, with China’s economy growing more slowly because of COVID-19 related lockdowns (among other factors); and supply chain disruptions amplified by the war in Ukraine.
In other regions, IATA said Middle Eastern carriers a 9.7% y-o-y decrease in cargo volumes in March. Significant benefits from traffic being redirected to avoid flying over Russia failed to materialize. This is likely due to subdued demand overall. Capacity was up 5.3% compared with March 2021.
Latin American carriers reported a 22.1% increase in cargo volumes in March compared with a year ago. IATA said this was the strongest performance of all regions. Some of the largest airlines in the region are benefitting from the end of bankruptcy protection. Capacity in March was up 34.9% compared to the same month in 2021.