On 22OCT20, TIACA presented the current state of affairs of the air cargo industry to its members in two separate “Economics4Cargo” 30-minute webinars. They are part of a wider move to
keep the industry informed as closely as possible.

One webinar had the regional focus on Europe and North America, the other one on Asia, Africa, and the Middle East. The data was compiled and analyzed by the Dutch company, CLIVE BV and presented
by its CEO, Niall van de Wouw.

The global air cargo volumes continued their gradual recovery in October. With the week of 4-10 May as index, week/week demand grew by 38 percent points in the second week of October. Compared to
September, the growth rate was a bit slower.

The present global dynamic load factor of 71% is the highest since CLIVE BV started measuring in MAY18. “This is reflected in the rates,” said Mr van de Wouw. “The rates on the route
China/HK to the U.S. are 70% above last year’s levels. By the summer they had gone through the roof, but they came down very quickly.” The last couple of weeks indicate some stabilization.

Good news for African volumes
On the route from China/HK to Europe, the evolution was reflected through the actual rates. After a peak up to 9 USD/kilo in the summer, they came down again to some 4 USD/kilo. Despite the
Golden Week Holiday in China, which is usually linked to a slowing down, the rates on this route continued to climb. Both in the routes to the U.S. and Europe, the steep rise in the summer was
caused by Covid-19-battling deliveries.
Good news for the Africa to Europe volumes, which show a stronger recovery than the global recovery over the last 6 to 7 weeks. While the global volume decline is still around -18% compared to
last year, the decline on the Africa-Europe leg is only -9%.

Remarkable divergences on routes between Europe and the U.S.
The Europe to U.S. and U.S. to Europe routes show an interesting correlation between dynamic load factor and rate development. From Europe to the U.S., the rates are at the moment 150% higher
than in 2019. On the U.S. to Europe leg, the difference is only 75%.  Mr. van de Wouw added that, from an analyst’s point of view, it is that there are no intermediate stops on the Europe to
and from U.S. route.
Apparently, the westbound capacity is better used than the eastbound one. The westbound load factor was between 80 and 100, eastbound between 40 and 65. According to Mr. van der Wouw, this has an
impact on the negotiation power between airlines and freight forwarders.

Different discussion dynamics
“You get a different conversation between airlines and forwarders with 80 than with 65. This is how certain dynamics work in different markets. With low load factors freight forwarders play
their game, with high load factors the airlines. You get a shift in negotiation power.”
That said, the exceptionally high dynamic load factor now already, before the real start of the peak season, indicates that the true peak season will face challenges.

Much going on at TIACA
TIACA was also glad to announce the imminent publication of monthly load factor analyses exclusively to its members from NOV20, which will be posted on the soon-to-be-launched new TIACA member
portal. The organization has also launched its first air cargo sustainability survey. The results will be discussed at the Digital Air Cargo Forum early December. TIACA also announced the
publication of a white paper on project Sunrays findings due early December.

Marcel Schoeters

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