Q1 2020 Air Freight Analysis

The global outbreak of COVID-19 profoundly impacted the overall Q1 2020 air freight result, making it a rough period for the air freight sector of supply chain. To document the impact, IATA published the impact on international air cargo demand and capacity, which represent 87% of air cargo.

• Global demand plummeted 15.8% CTKs (cargo-tons-kilometers) in March YoY for international markets.
• Global capacity fell by 24.6% in March 2020 compared to March 2019 for international markets.
• Belly capacity for international air cargo shrank 43.7% in March 2020 in comparison to last year.

A 6.2% increase in the expanded use of freighter aircraft partially offset this decrease was by including the use of idle passenger aircraft for all-cargo operations.

Overall, cargo volumes dropped 19-30% YoY; this fall does not give the market enough time to pull back when PPE (personal protective equipment) and other medical necessity demands subside. However, slowly opening the economy back up, gives hope for downstream of demand.

Air market performance expectations are tied to overall global trade forecasts since the two are closely interlinked. WTO (World Trade Organization) published multiple analyses last week, diving into scenarios of economic recovery and projections in the world trade & air cargo volumes. The chart "Growth in world trade and air cargo volumes (% YoY)" points to a steep decline in air cargo volumes due to the Covid19 pandemic. 

This shock added up to a weak year in 2019 due to the US-China trade conflict.

The chart is presenting us with two scenarios. While the 'optimistic' scenario estimates a fall in trade volumes of 13% in 2020 YoY, the 'pessimistic' scenario compares it to the Great Depression of 1929 and suggests a 30% fall.

WTO expects a turning point in 2H 2020. In the short term, WTO foresees high demand for dedicated freighters, which counters the missing belly capacity. During the midterm, the economies will re-open. The world trade will still need to overcome a sharp decline in economic activity and global recession, and the financial performance will reflect it in the year ahead. Overall, the WTO expects to return to pre-pandemic levels in 2021.

Contributor: Natalie Brandlova 

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