April 2020: again a great weight loss for worldwide air cargo, but frenzied markets move in very different ways…

May 12, 2020

What a difference two months make…

Back in February, the world looked reasonably normal. Today, we wonder whether ‘normal’ will ever return, as air cargo markets have been uprooted like never before. Market parties see increases and decreases in their business that would have been regarded – until very recently - as wholly unrealistic.

And so, people look for information, now more than ever. However, different analysts show different trends, and the air cargo world struggles to make sense of all data presented. To show high-level, worldwide market trends in stable times, data need not be based on very detailed inputs. But in today’s frenzied markets, almost all individual players (are forced to) each go their own different way, resulting in starkly different business patterns. That specific situation calls for detailed analyses of the largest possible data sets, without which it will be impossible to generate truly representative data.

We are pleased to present our data for the month of April 2020, based on the full worldwide Air Way Bill data and capacity & load data of 65 resp. 45 (mostly very large) airlines having reported so far.

Worldwide, chargeable weight carried by air, decreased with 31.7% compared with April 2019 (year-over-year, YoY), and by 22.8% compared with March 2020 (month-over-month (MoM). Due to the well-publicized lack of cargo capacity, caused by the forced inactivity of many passenger (!) aircraft, airline yields (in USD/kg) went up very sharply, by 63% MoM, and by 99% YoY. Express business fared better than regular cargo (-8% MoM), particularly from Asia Pacific (+21% MoM). The category of smallest parcels (0-50 kg) suffered most (-42% MoM), whilst – not surprisingly – big shipments of more than 5000 kilograms were heavily favored: they hardly lost ground, while upping yields by more than average. And so, in the midst of aviation’s biggest crisis, worldwide air cargo revenues went up in April, by 36% YoY and by 26% MoM. For how long? If only we knew…

Many differences
Airlines operating nothing but freighters, had a field day in April, with cargo carried only slightly less than in March, but with a revenue growth of 29%. Interestingly, airlines with a mixed fleet, managed to raise their unit prices by much more (+71% MoM), and they were in turn outdone by the passenger airlines (+95% MoM). But the ‘mixed’ airlines lost a quarter of the volumes they carried one month earlier and the passenger airlines half…. In all origin areas except Europe and North America, the ‘mixed’ airlines outdid the two other airline categories in terms of revenue growth, both MoM and YoY.

Airlines based in Africa and airlines based in the Americas, profited least from the surge in market prices: their revenues, measured in USD, went down by 18% resp. 4% YoY. In contrast with them, the airlines from Asia Pacific, the Middle East & South Asia (MESA) and Europe, increased their revenues YoY by 70%, 44% and 30% respectively. The airlines from Asia Pacific and MESA did best MoM, with revenue increases of around 30%.

When looking at business development in the various regions of the world, we noted markets ex-Africa lost 29% MoM in revenues, whilst African airlines as a group improved 15% MoM in worldwide revenues. A similar pattern occurred among European airlines. Together, they increased their worldwide revenue by 22% MoM, whilst European markets lost 2%. And the same was the case in MESA: the region lost 24%, but the airlines from the Middle East gained 30% worldwide.

In Asia Pacific the reverse was the case: the markets ex-Asia Pacific grew their revenues by 66% MoM, but the airlines from the area increased their worldwide revenues by a much lower percentage, viz. 33%. Airlines from outside Asia Pacific profited more from the boom in the area than airlines based in Asia Pacific.

The YoY revenue increase was by far the largest in the transport of pharmaceuticals (+116%) and in Vulnerable/High Tech (+71%)

Capacities & Load Factors

The worldwide load factor increased by 9 percentage points. As the number of flights with passenger aircraft (‘Pax a/c’) dropped by a massive 75%, their combined cargo load factor (‘Lf’) increased by 12 percentage points. The conversion from Pax a/c into hybrid freighters was most successful in and from Latin America, MESA and Asia Pacific, and seemed less impressive in and from North America, Africa and Europe. Africa and Latin America were the areas from which freighters increased their Lf’s considerably. From other areas Freighter Lf’s (measured in kilograms) dropped, due to the much more voluminous cargo carried.

While Freighter Lf’s slightly dropped every week from March 1 to April 30, the conversion mentioned caused Pax a/c Lf’s to rise strongly and steadily from early April.
Volumes picking up

Carving up April in three periods of 10 days each, we saw an uptick in the third period. The last 10 days of April recorded worldwide volumes 6% higher than in the first 10 days. The different origin regions showed varying patterns: Africa +5% and Asia Pacific +8%, MESA +14% and Latin America +32%. Europe and North America were the only regions with a below average last 10 days, with -1% and -5% respectively.

Mother’s Day in the USA

Let’s also take a look at a few of the largest country-to-country markets. The best and the worst markets both originated in Hong Kong: to Saudi Arabia (weight +207%, revenue +330% MoM), and to Japan (weight -27%, revenue -30% MoM). China-East to Germany was one of the most impressive markets: weight +57%, revenue +281% MoM.

But the performance that made us believe that – thankfully - some things remain normal after all, was in the market Colombia – USA Atlantic South. Its MoM weight growth was 64%, prompted by the vast amounts of flowers transported to the United States for Mother’s Day, with a spike between April 21 and April 29!