Travel disruptions in China, Ukraine dip global air cargo demand

GLOBALAIR cargo markets have recorded a drop in demand and contraction in capacity as effects of Omicron in Asia and the Russia– Ukraine war continue to create a challenging operating backdrop that is driving the decline.

The International Air Transport Association ( IATA) in its April 2022 data, released recently, showed that cargo tonne- kilometers ( CTKS) fell 11.2 per cent compared to April 2021(- 10.6 per cent for international operations). Global demand is down by one per cent compared to April 2019.

Capacity was two per cent below 2021 (+ 1.2 per cent for international operations). Both global capacity and international capacity decreased slightly in April compared to March. Asia experienced the largest falls in capacity.

Key factors in the operating environment include the war in Ukraine. It led to a fall in cargo capacity used to serve Europe as several airlines based in Russia and Ukraine were key cargo play - ers. And the zero- COVID policy in China led to capacity challenges due to flight cancellations because of labour shortages.

New export orders, a leading indicator of cargo demand and world trade, are now shrinking in all markets except the U. S. 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).

IATA’S Director General, Willie Walsh, noted that the lockdowns brought much of the world’s largest port, Shanghai, to a standstill. Supply chain disruptions due to the Ukraine- Russia conflict are also adding to the downward pressure on trade.

“The combination of the war in Ukraine and COVID- 19 lockdowns in China ha ve pushed up energy costs, intensified supply chain disruptions, and fed inflation. The operating environment is challenging for all businesses, including air cargo. But with China easing lockdown restrictions, there is cause for some optimism and the supply/ demand imbalance is keeping yields high,” Walsh said.

In regional performances, African airlines saw cargo volumes decrease by 6.3 per cent in April 2022 compared to April 2021. This was significantly slower than the growth recorded the previous month ( 3.1 per cent). Capacity was 1.5 per cent below April 2021 levels.

Asia- Pacific airlines saw their air cargo volumes decrease by 15.8 per cent in April 2022 compared to the same month in 2021. This was the weakest performance of all regions and significantly slower than the previous month (- 5.1 per cent). Airlines in the region have been heavily impacted by lower trade and manufacturing activity due to Omicron- related lockdowns in China. Because of this, available capacity in the region fell 19.4 per cent compared to April 2021, the largest drop of all regions.

North American carriers posted a 6.6 per cent decrease in cargo volumes in April 2022 compared to April 2021. Demand in the Asia- North America market declined significantly, however, other key routes such as Europe – North America remain strong. Capacity was up 5.2 per cent compared to April 2021. Several carriers in the region are set to receive delivery of freighters in 2022, which should help address pent- up demand on routes where it is needed.

European carriers saw a 14.4 per cent decrease in cargo volumes in April 2022 compared to the same month in 2021. The Within Europe market fell significantly, down 24.6 per cent month on month. This is attributable to the war in Ukraine. Labor shortages and lower manufacturing activity in Asia due to Omicron also affected volumes. Capacity fell 0.2 per cent in April 2022 compared to April 2021.