Mixed start to 2021 for air freight

Volumes from China and northeast Asia were up sharply in the first two months, but most other origin regions report a ‘drastically different’ picture of year-on-year declines, analysis by WorldACD shows.

The global air freight market has seen a mixed start to 2021, with a slight year-on-year increase in volumes and far higher average prices compared to the first two months of last year. But analysis by WorldACD shows huge differences from region to region, with volumes from China and northeast Asia up sharply in the first two months, compared to previous years, but most other origin regions reporting year-on-year declines.

Globally, February showed a worldwide year-on-year (YoY) weight increase of 1.1%, accompanied by a yield/rate increase in US$ of 84%. After a strong volume drop in the middle of the month, around Chinese New Year, the end of the month showed a strong recovery, WorldACD noted.

Due to the annually changing dates of Chinese New Year (CNY), WorldACD said it traditionally looks at January and February together. Though counting one day less in 2021 than in the leap year 2020, the YoY figures for these two months are + 0.9% in weight and +79% in yield/rate (in US$). Within the two-month period, average prices increased by 4%, month on month (MoM), and average load factors went up by 3.2 percentage points, MoM.

But breaking down these worldwide averages, it found that Asia Pacific – one of the six main regions charted by WorldACD – was “in a class of its own, emphasising the increasing importance of the region in world trade”.

Except from the sub-region Australasia & the Pacific, which saw volumes down by 26%, YoY, air cargo exports from Asia kept growing strongly in the first two months of 2021. That growth was particularly strong from the sub-regions China and North East Asia, which showed YoY growth figures of 46% and 24%, respectively, compared with January-February 2020, while the entire region’s air cargo output this year grew by 19%, YoY.

Given that 2020 saw a troubled start for China and northeast Asia, WorldACD also compared this year’s performance with 2019 and 2018. The entire Asia Pacific region’s air cargo output this year was up by 14% vs 2019, and by 6% vs the bumper year 2018. In imports, Asia Pacific was 7% above 2020, 2% above 2019, but 4% below 2018, with WorldACD noting that the intra-Asia Pacific business was growing much less than exports to other regions.

Drastically different for other sub-regions

But for the other 19 “sub-regions” around the world, “the picture is drastically different”, WorldACD highlighted. Apart from three small sub-regions – Central Africa, Mexico and Central Asia – all sub-regions showed a decrease in outgoing business in 2021 compared to each of the three foregoing years. Hardest hit are South Asia, with a decrease of around 24% vs each of the three earlier years, North Africa (-23% YoY), Southern Africa (-20% YoY), the Gulf Area (-17% YoY) and Canada (-16% YoY). worldwide, the trend may be positive, but in many markets, the reality is different.

Looking at yields or prices for the various air freight product types, WorldACD found that all six origin regions – Africa, Asia Pacific, Central & South America, Europe, MESA and North America – had “behaved in the same way when it comes to increases in yields/rates: in all regions, the yield/rate growth YoY continues to be stronger in general cargo than in special cargo.”

But that was not the case when it comes to volumes: with a YoY growth of 29% YoY, Vulnerable Cargo & High Tech “very clearly outpace not only the market as a whole, but also score much better than all other large special cargo categories, including Pharma/Temp, which were all negative YoY”, WorldACD noted.

However, from Asia Pacific, the ‘High Tech’ segment increased by more 25% YoY in each regional direction, fuelled by the worldwide demand for work-from-home devices.

WorldACD noted that the highest rates in air cargo at the moment are paid for business originating in South Korea, both eastbound and westbound, highlighting that “demand for COVID-19 diagnostic kits and a sea/air transfer play an important role here”.

March ahead

Looking at how things are shaping up in March, WorldACD noted that worldwide volumes at the beginning of the month were slightly higher than at the end of February. While that may be an early sign that the month will be positive, it noted that “many individual markets will no doubt experience a different reality once again”.

Source: Lloyd’s