When ‘nothing is normal’ due to COVID-19, the civil aviation industry finds a lifeline for revenue, a growth boost in air cargo

Last year, when the COVID-19 pandemic made travel restrictions a norm, cut commercial flights, inflicted the biggest drop since the 1950s on the world’s civil aviation industry, and created With net losses of $ 126.4 billion, the airlines were caught off guard and struggled to stay afloat. .

The industry, however, has discovered that the black cloud has a silver lining after all: rapid growth in air freight due to huge demand to keep goods, especially medical supplies and essentials, in movement, no matter what.

The focus on cargo since the onset of COVID-19 has had a huge impact not only on the airline industry, but also on global supply chains, helping to transform systems, technologies, investment models and future prospects.

The first half of this year offered the first glimmer of hope. Air cargo saw the strongest growth in the first half of the year since 2017, according to data from the International Air Transport Association.

IATA data further showed that the demand for air cargo was primarily for the transport of vaccines, personal protective equipment and life-saving medical supplies. By the end of 2020, industry-wide freight tonne-kilometers had returned to near pre-crisis values. (Tonne-km is a unit of measurement of freight turnover. For example, 2 tonnes of goods transported over 2 km would equal 4 tonne-km.)

Last year, the top five airlines ranked by tonnes of scheduled cargo flown were Federal Express, United Parcel Service, Qatar Airways, Emirates and Cathay Pacific Airways.

Willie Walsh, Managing Director of IATA, said: “Air cargo is doing well as the global economy continues to recover from the COVID-19 crisis. lifeline for many airlines as they grapple with border closures that continue to devastate international passenger traffic. It is important to note that the strong performance of the first half should continue. “

In China, air freight and mail transport volumes reached 3.74 million metric tonnes in the first half, up 24.6% year-on-year. This included the airlift volumes of proprietary cargo planes, which reached 1.52 million tonnes, up 44.2% from the same period of 2019, according to the Civil Aviation Administration of China. .

In August, air freight rates on the Trans-Pacific and Asia-Europe trade routes rose 20-40% and are expected to continue to rise, following new measures to curb new cases of COVID-19 in the country. Pudong International Airport. in Shanghai in mid-August, according to an Air Cargo World article.

Earlier this month, the air cargo industry entered its peak season. Peak demand typically lasts until the end of the year. Prices will fluctuate at a high level, industry experts have observed.

With reduced capacity at Pudong Airport, freight forwarders see longer-than-normal transit times as cargo waits for outbound flights.

Flexport, a San Francisco-based global logistics platform company, said it expects air freight prices to and from China to remain at current high levels, if not higher, as the capacity continues to decline in the Chinese market.

Henry Ko, Managing Director of Flexport Asia, said: “This is obviously made worse by the normal volume pressure in peak season. Normally, prices would start to drop at the end of the year in January, but we have learned that nothing is normal in these times, so forecasting is difficult. We will constantly review and balance our demand and supply to optimize production and keep our customers’ valuable cargo on the move.

Qi Qi, an independent aviation industry analyst, said that Pudong International Airport in Shanghai is the largest international air cargo port in China, but when cases of COVID-19 emerged from the cargo area international airport, this had a negative impact on freight. handling efficiency and eliminated the freight distribution facility.

“In the short term, as supply is less than demand, this will lead to higher freight rates. In the medium to long term, freight rates are unlikely to remain high. The air cargo capacity of Pudong International Airport is expected to return to normal once the pandemic is more under control, ”Qi said.

Wang Jiangmin, a civil aviation commentator with China Southern Airlines, said, “Prices for air cargo transportation have increased due to the reduction in the number of flights due to the pandemic. Strict pandemic prevention measures and the backlog of shipments have intensified the situation. “

In addition, rising freight rates in the relatively slower shipping industry have inflated demand for air freight in an already tense situation.

On September 10, the Shanghai Export Containerized Freight Index, a measure of actual ocean freight rates at major Chinese ports, hit a record 4,568.18 points.