Air freight ends 2020 on a ‘relative high’

After an extraordinarily turbulent year, December finishes with the first year-on-year growth in weekly volumes in over 12 months, according to new statistics from CLIVE Data Services and TAC Index. After an extraordinarily turbulent year and despite “no traditional peak season” for global air cargo demand in the fourth quarter (Q4) of 2020, the year ended on a “relative high” in December with the first positive year-on-year growth in weekly volumes in over 12 months, according to the latest industry statistics and analysis from CLIVE Data Services and TAC Index.

Volumes in the period 21 December 2020 to 3 January 2021 – compared to a corresponding period of 23 December 2019 to 5 January 2020 – rose 8%, contributing to two new records for CLIVE Data Services’ ‘dynamic load factor’ analyses. Based on both the volume and weight perspectives of cargo flown and capacity available, the ‘dynamic’ load factor reached a new high of 73% in mid-December, while the week ending 3 January 2021 saw “an unprecedented level for this time of year” of 65%, 13% points above the corresponding week a year ago, the two analysts reported.

December data showed a continued closing of the gap in year-on-year volumes to -5% versus December 2019 – significantly up from a yearly low of -37% in April – as volumes rose 2.5% over the levels recorded the previous month, November 2020. This produced an overall average dynamic load factor for the last four weeks of December of 71%.

CLIVE Data Services’ weekly analyses also recorded a 2% increase in available capacity in December compared to November, but this remained 21% below the level of cargo space on offer in the last month of 2019 – including both freighter and bellyhold capacity.

“For an industry looking for every glimmer of positivity, December’s data provided some modest growth indicators,” commented Niall van de Wouw, Managing Director of CLIVE Data Services. “December’s performance was surprisingly strong compared to the flattish level recorded in November and, in the second half of the month, volumes didn’t fall as much as we’d typically anticipate for this normally quieter time of year.

Rates held up in December

Air freight rates held up in December and in some cases increased over their levels in November “even after the hoped-for peak season failed to materialise and there was no immediate sign of any major impact from shipments of Covid vaccine”, said Robert Frei, Business Development Director at TAC Index.

Westbound pricing from Asia to Europe and the US, and Europe to the US, was significantly higher compared to eastbound rates, as demonstrated by PVG-EU prices more than four times higher than FRA-CN, and FRA-US pricing more than 2.5 times higher than ORD-EU, Frei highlighted.

“Pricing from Asia to the US is still the highest, followed by Asia to Europe and, lastly, the Transatlantic, with the highest prices reached in week 51,” he added.

Van de Wouw commented: “To outside observers looking at 2020, increasing airline revenues – at a time of decreasing volumes – may seem a contradiction. But it is logical considering the rise in the dynamic load factor, where demand and supply come together.

“It clearly demonstrates the reason why air freight rates have gone up and reemphasises the value of weekly data. It allows companies to gain a better and quicker understanding of the way the market is trending and where it is rate-wise. In such a volatile business environment, this enables them to make better informed pricing decisions to support their recovery.”

The latest Freightos.com marketplace data shows that air cargo rates from China to major European and US destinations are still 35% higher than before the start of peak season in October, and more than 150% higher than their levels this time last year, freight rates and digitalisation specialist Freightos said.

Likewise, the Freightos index for air cargo demand, based on search volumes on its WebCargo e-booking platform, “indicates that on most major lanes out of Europe demand remains strong, with December down only about 6% lower than its October peak season high”, highlighted Freightos CMO Eytan Buchman.

He noted that several airlines had announced the addition of new cargo capacity coming onto the market, “which could ease space restrictions and high rates as capacity is still tight with passenger travel not yet recovered”.

Source: Lloyd’s