August 19, 2020
It's been widely reported that air freight shipment counts have been greatly impacted by the COVID-19 pandemic. IATA recently reported that the demand for air freight in June decreased by 17.6% year on year. They noted that the underperformance was driven by air freight losing market share of total world trade, as buyers turn to cheaper but slower means of transport.
Airlines have faced unprecendented turmoil due to the lack of passenger flights available that would usually import and export freight in addition to passengers. Cargo levels have plummeted as lockdown measures and new travel regulations were imposed across the world at varying degrees.
In North America and elsewhere in the world supply chains struggled to keep pace as essential items disappeared off store shelves as consumers began panic buying. In addition, manufacturing plants closed their doors and lockdown measures kept people at home. (increasing orders in homecare products for some manufacturers!). Supply Chain disruption weighed heavily on manufacturers globally.
As the pandemic continues at a varied pace across nations, what is in store for air freight services now that countries begin to open their borders? Will we see growth rates in the near future?
In advance of peak season, cargo trends have always been difficult to predict. With transportation disruption like we have rarely experienced, how will the industry manage the remainder of 2020?
Joe Cipolla, VP Air Freight at Crane Worldwide Logistics comments on the current scenario:
Peak season is potentially around the corner and carriers are providing mixed predictions in their forecasts.
The impact of the COVID-19 pandemic in the second half of the year could create further agitation in the market should a second wave of the virus begin.
Ocean carriers continue to reduce capacity and this may cause a spike in November through to January 2021, this will become more evident as September approaches.
The awaited vaccine for Coronavirus and the numerous trials that are taking place around the world could highly impact the demand for air cargo globally. As recently reported in The Loadstar, this could be the biggest product launch in history. There is always the likelihood that the COVID-19 vaccine is approved prior to the end of the year. We could then see a surge in air freight demand as nations race to distribute the product as quickly as possible.
The increase in shipments of personal protective equipment (PPE) such as face shields and masks has been in the news as passenger airlines put cargo boxes on seats instead of passengers with the goal of protecting public health. There continues to be high demand for PPE equipment globally as well as protective screening and additional materials used to get employees back to the work place.
Time-sensitive shipments have also been at an all-time high as countries have scrambled to get sufficient measures in place to support Coronavirus cases.
Social Distancing and protective measures
In line with local government legislation, the airline and freight industry has also experienced the added complication of maintaining social distance measures. Protecting clients and the workforce is clearly a priority. Passenger confidence is key to ignite demand for international travel however 55% of respondents to IATA’s June passenger survey state they don’t plan to travel in 2020. Operations on the ground must protect each other with the use of the correct PPE equipment and social distancing measures.
As strict lockdowns began to lift globally in May, manufacturers began to kick start their productivity levels and global manufacturing output has begun to show signs of an increase. The number of international flights increased in July and therefore airline cargo capacity is beginning to show improvement.
However, there is still significant uncertainty in the market as airlines begin to bear the financial impact of decreased performance in the first half of the year. There has been an unprecedented amount of carriers that have either filed or will file for financial protection while others have received government funding to continue to operate. Those without financial security options have suspended operations all together. Daily updates are available from IATA as to the current status of airline carriers here
At Crane Worldwide, we remain in close contact with our airline partners, working in partnership with both our suppliers and clients to provide solutions to the challenges that the pandemic has brought. We continue to provide our monthly market updates on all transportation modes and are available to discuss any concerns you may have for the future.