U.S. port strife boosts demand for air cargo
More shippers are flying their goods to market despite higher costs, leapfrogging the ongoing delays at West Coast ports that have hindered the movement of merchandise since before Christmas. This could prove beneficial to airlines like Air Canada that have more space in the bellies of their passenger planes than ever before.
Air freight volumes jumped 11.7% in February compared to a year earlier, according to data released Wednesday by the International Air Transport Association.
IATA attributes the unusual spike in traffic to two things: the timing of the Chinese New Year, which tends to be accompanied by increased movement of goods and people, and the congestion at U.S. ports due to a lengthy labour dispute that was resolved in late February.
“A combination of factors made February the strongest month in a very long time for air freight,” Tony Tyler, IATA’s director general and CEO, said in a statement. “Nobody expects growth to continue at this pace.”
It may be a short-term trend, but it’s having a noticeable impact on North American airlines, which saw freight volume rise 8.7% year-overyear.
“Really since before Christmas it’s been getting worse and worse and worse trying to get [cargo] space from Asia to North America,” Ruth Snowden, executive director of the Canadian International Freight Forwarders Association, said in an interview.
“So Canadian importers are saying, ‘ We have to fly cargo overtop because the ocean freight is just sitting there,’” she added.
“Our members think it’s going to be two or three more weeks before we get back to a normal supply-and-demand situation on the air freight side.”
This is welcome news for an industry that has underperformed passenger airlines for at least a decade due to slow global economic growth. However, freighter airlines are still facing overcapacity as big new passenger jets like Boeing Co.’s 787 Dreamliner are able to carry more cargo in their bellies at lower costs.
Air Canada highlighted this fact in its most recent annual report, saying the approximately 30% greater cargo capacity on the Boeing 787 compared to the 767 “improves Air Canada’s revenue potential.”
Air Canada is particularly well positioned to take advantage of the increased demand for cargo space, said Ms. Snowden. This is because of its multiple daily flights between Asia and Canada, many of which are serviced by 787s.
Air Canada did not immediately respond to a request for comment.
The increase in air freight volume also appears to be boosting traffic at West Coast airports. The Vancouver Airport Authority saw a 25.9% jump in air cargo tonnes in February compared to a 6% increase in passenger traffic, although spokeswoman Jenny Duncan said it’s not clear whether this is directly connected to the port delays.
One of the major drivers of the increase in air cargo traffic is shipments of auto parts, according to IATA.
“The implications of ongoing congestion at major U.S. sea ports has meant that Japanese car manufacturers have turned to air transport for shipment of parts across the Pacific after a recall of millions of defective vehicles,” the organization said in its February market analysis.
Honda Canada was bringing in parts by air to bypass the ports but has since stopped.
Overall, IATA expects air freight volume to grow 4% to 5% this year.