News / Aircraft flying full as volumes – and air freight rates – go up another gear

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Aircraft are much fuller than they used to be – that’s the main takeaway from the most recent air cargo industry data.

This has revealed higher demand in April after a dip in March and, alongside the drop in capacity, air freight is under “significant strain”, according to Clive Data Services.

With a severely muted summer schedule, capacity remains tight. Volumes in April were 1% higher than in April 2019 – but capacity was 18% lower. The dynamic load factor for April was 71% – 10 percentage points higher than in 2019, and 4 percentage points higher than last year.

“The air cargo market shifted gear again in April,” explained Niall van de Wouw, managing director of Clive.

“The month-over-month change from -3% to +1% is quite a jump, but a dynamic loadfactor of 71% represents a tremendous strain on the air cargo system.

“This lack of bandwidth, capacity-wise, is being exacerbated by the fact there is no summer schedule based on passenger demand, which is contributing to the high rates being reported in the market.

“Airlines operating ‘preighter’ services need these rates in order to operate cargo-only operations, because the margins on these services are very thin.”

China-Europe is particularly constrained, with load factors ex-China at 95% of more. Volumes were 18% higher than in 2019.

Volumes from Europe to North America fell some 10% from 2019 – but capacity fell 40%, giving it a dynamic load factor of 87%, up 21 percentage points from 2019.

The TAC Index noted that rates had started to rise again after a dip in March.

“There has been a big bounce back from the slowdown we saw in March, with prices strengthening, driven by demand outstripping capacity in several markets, with some lanes recording higher pricing levels versus the highs seen in 2020,” said Gareth Sinclair, advisory board member of TAC Index.

“The Baltic Air Freight Indices increased by almost 17% in April over March, largely driven by China (HKG & PVG) with growth at around 30%, but London Heathrow also saw an improvement on three out of four indices, although at more modest levels (3%), building on similar growth levels in March.

“Frankfurt, Chicago and Singapore origins all saw declines over March levels. There continues to be a dynamic market environment with operational crewing and permits continuing to impact some carrier operations.”

He concluded: “The airfreight market continues to be strong, particularly CN/HK to US, and may continue, at least in the short term, with demand strengthening as countries relax lockdowns and subdued passenger travel continues to impact capacity.

“With the easing of Hong Kong quarantine rules for crew, Cathay Pacific, for example, is looking to restore its full market presence as soon as possible, which may dampen pricing.”

IATA this week issued its air cargo data for March.