Mavroudis Global Transportation & Logistics

Airline group says global cargo volume grew 6.9% in 2021

January 27, 2022

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The strong finish left the industry with a 6.9% gain in cargo volume for the full year, with the key international sector besting 2019 by 7.4%. 

Airlines in North America topped the growth chart in December, with international demand growing 20.5% versus the same month in 2019. Helped by government stimulus measures and strong consumption, the group enjoyed a 20.2% hike in shipment levels for the year. No capacity was lost because all-cargo operators deployed more aircraft to the trans-Pacific region where higher yields were available.  

“Air cargo had a stellar year in 2021. For many airlines, it provided a vital source of revenue as passenger demand remained in the doldrums due to COVID-19 travel restrictions. Growth opportunities, however, were lost due to the pressures of labor shortages and constraints across the logistics system. Overall, economic conditions do point towards a strong 2022,” Director General Willie Walsh said in a statement accompanying the results.

IATA’s December numbers are at odds with those of London-based Clive Data, which earlier this month published December figures showing a 5% drop in demand from 2019. Clive uses a different methodology than IATA’s cargo-metric ton-kilometers.

Economic drivers for continued air cargo growth include merchandise trade (up 7.7% in November vs. 2019) and industrial production (up 4%), extremely low inventory levels, ocean shipping bottlenecks and record high rates, and COVID outbreaks creating need for personal protective equipment. 

Rising infection rates are a double-edged sword because they can also cause factories and freight transport nodes to slow activity or shut down, which could reduce the amount of airfreight shipped.

Air cargo demand dropped 10.6% in 2020, but most of the damage was in the first half of the year. By the summer air cargo demand surged and has remained hot ever since. 

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November’s performance defied expectations coming on the heels of strong growth in previous months and because shipments tend to reach their highest point each year in the final delivery rush for holiday shopping. Analysts say the decline was more a function of limited airport infrastructure and labor that prevented timely loading of aircraft than a pullback in economic activity.

Air cargo capacity for the year shrank 11% from 2019 (minus 12.9% for international) as passenger airlines continued to match supply with limited travel demand, but the situation improved throughout 2021 as more aircraft returned to service, with available cargo space only 4.7% lower in December than two years ago.

Capacity in passenger aircraft — either in passenger service or operated as auxiliary cargo aircraft — in the first 11 months of the year was 38.6% below the 2019 level, but a 25.9% jump in freighter capacity offset a large portion of the deficit, according to IATA. A combination of factors — more freighter conversions, new production deliveries, planes brought back from the scrap heap and increased asset utilization — accounted for the increased space in all-cargo aircraft.

More than half of pre-crisis cargo was carried in the belly of passenger aircraft.

IATA said December passenger demand was down 45% from 2019, a slight improvement from the prior month, but would have been stronger without omicron-related travel restrictions that slowed the recovery. For the full year, passenger throughput was down 58.4% from 2019 and 75.5% for international travel on 65.3% less capacity. 

Before omicron, international traffic was recovering toward the end of the year, with the exception of the Asia-Pacific region, where governments have instituted some of the strictest border restrictions in the world. China, for example, has temporarily banned travel from several countries, and arriving travelers must undergo aggressive testing and be subject to a minimum 14-day quarantine. Before the pandemic, intra-Asia travel alone represented 13.3% of all international travel and last year it accounted for 1.5%.

IATA said that forward bookings have deteriorated since November, leading to a weaker-than-expected January and February period. But Walsh said the omicron wave should pass quickly, leading to relaxation of travel restrictions and a strong return in travel demand by the spring.

Walsh reiterated that there is no correlation between the introduction of travel restrictions and suppression of the virus. Restrictions should be removed, particularly for people who are fully vaccinated, he said.

“The measures have not worked. Today omicron is present in all parts of the world. That’s why travel, with very few exceptions, does not increase the risk to general populations. The billions spent testing travelers would be far more effective if allocated to vaccine distribution or strengthening health care systems,” he said.

IATA published a survey of 87 airlines last week showing that operating losses across the industry improved from 13.6% of revenues in the second quarter to 2.6% in the third quarter. Their is growing confidence that omicron will have less of an impact on the industry than originally expected. But jet fuel prices are now at their highest level since 2018, about $101 per barrel compared to $78 in October, adding pressure on operating costs just as travel demand is hit by government restrictions.

Jet fuel is the largest expense for many airlines, representing about a quarter of total operating costs.

Tight capacity combined with robust shipping demand resulted in a higher fill rate for aircraft and record shipping prices in December that were 2.5 times greater than before the pandemic.

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