- Demand for air freight continued to grow from pre-pandemic levels, with August volumes up 1% from 2019 levels, according to Clive Data Services. However, cargo suspensions in Shanghai have added additional pressure on already low air cargo capacity.
- Capacity has recovered from its pandemic lows, up 18% from August 2020. But it is still down 16% from August 2019, as the activity of international passenger airlines is not yet returned to pre-pandemic levels, according to Clive.
- The closure in late August of the cargo terminal at Shanghai Pudong International Airport, known as PACTL, contributed to an 18% drop in capacity westward from China, according to Clive. “As a result, spot rates rose almost 20% in the last week of August compared to the last week of July,” he said in a statement.
Even as air cargo capacity recovers, the shutdown of PACTL shows how disruptions related to COVID-19 can still trigger noticeable fluctuations in availability and spot rates.
âWhen something like this happens at what is the third largest freight airport in the world, it only reflects how fragile things are for global supply chains and the immediate impact on fares that were already high, âClive CEO Niall van de Wouw said in a statement. .
Processing capacities at Shanghai Pudong Airport are improving and freighters have been returning since PACTL closed on August 20 due to reported cases of COVID-19 among freight workers, Flexport said. in a September 21 market update. But even excluding that airport, “the market is still very tight,” said Flexport.
Retailers have fought over capacity ahead of the holiday season and have diverted cargo from ocean carriers due to continued congestion at ports and the need to restock. On the call for Gap’s second quarter resultsCFO Katrina O’Connell said the company has made “significant investments in air freight to partially alleviate lead times and longer shipping delays so that our inventory is well positioned to compete during the start of the school year and the holidays “.
Airlines don’t expect capacity constraints to go away anytime soon. Brie Carere, Director of Marketing and Communications at FedEx, said when calling the company’s first quarter results On Tuesday, that capacity is expected to be limited for at least the first half of calendar year 2022, with a full recovery “not expected until 2024”.
Improved business confidence among airlines have slowed down recently in part because of the COVID-19 delta variant, according to the International Air Transport Association. The European Union restrictions recommended in August for U.S. travelers following an increase in COVID-19 cases, which could lead to a further drop in demand and then capacity.
“Shippers want to see more cargo capacity through the return of airline passenger operations, but some signals suggest this could be pushed back again on intercontinental routes following the EU’s recent recommendation to suspend all travel non-essentials from the US to Europe, âvan de Wouw said.