Resiliency and Traffic Growth, But Pressure Mounts For Air Cargo

This is an abbreviated version of the article - Air Cargo Is Resilient, But Pressure Mounts - by Aaron Karp.

The COVID-19 pandemic has led to a tale of two air transport industries: a passenger business that has nearly collapsed—with years expected before a full recovery occurs—and a cargo business that has demonstrated exceptional resiliency and is expected to post double-digit year-over-year (YOY) percentage traffic growth in 2021.

In an end-of-the-year briefing, IATA chief economist Brian Pearce noted that while passenger traffic is generally 70% below pre-pandemic levels, cargo traffic is down just 7%.

“Cargo is proving to be the part of the airline business that can carry on during the COVID-19 crisis,” he said. “Indeed, cargo is a key means of support for getting pharmaceuticals and medicines around. [Belly] cargo is allowing many of the longer-haul routes to be cash positive—cargo revenues are replacing the high-yield business passengers who are absent. Air cargo is actually playing an important role in maintaining and reestablishing connectivity between countries and cities. … Demand is still robust in the most parts of the world for air cargo.”

Read the full article to discover why 2020 was a year of contraction for air cargo and why it has become a much more important business for many passenger airlines.

The air cargo sector also expects to see growing demand from the e-commerce sector, with IATA estimating that over 2 billion people shopped online in 2020. That’s a good and bad news story; 80% of e-commerce that moves across a border travels by air, which places additional stress on an already short supply capacity. For that issue to be addressed, IATA says there needs to be increased industry digitalization and better predictability and border management within the industry.

“For an industry looking for every glimmer of positivity, December’s data provided some modest growth indicators. 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,” CLIVE Data managing director Niall van de Wouw said.

For the complete anlaysis, read the full article - Air Cargo Is Resilient, But Pressure Mounts