Anticipated pressure on supply chains pushes air cargo rates up again in October

LATAM aircraft.

LONDON, UK: Market analyses by CLIVE Data Services for last month show that shippers – fearing a lack of peak season inventory – saw air cargo rates soar again in October, despite no clear signs of a surge in peak season demand for capacity.

As in previous months, CLIVE’s latest market intelligence reports air cargo market performance to pre-covid 2019 levels, as well as 2020 year-over-year comparisons, to provide meaningful analyses of the current conditions.

Demand for chargeable weight in October 2021 rose 3 per cent over the same month of 2019 and was +14 per cent higher than last year but CLIVE’s ‘dynamic loadfactor’ indicator – which measures both the volume and weight perspectives of cargo flown and capacity available to produce a true indicator of airline performance – remained lower than had been expected at 68 per cent.

Available capacity last month, while still -13 per cent versus October 2019, was +17 per cent compared to October 2020, but the dynamic loadfactor remained -3 per cent pts below the level seen in the first month of Q4 2020.

The big shift, once again, was in overall air cargo rates, up +155 per cent and +37 per cent in October 2021 versus October 2019 and October 2020 respectively.

As is often the case, CLIVE recorded significant market performance deviations. Flights ex Asia Pacific-Europe remained virtually full to capacity, lifting rates by a further 20 per cent over September 2021, while APAC-North America rates reached a double-digit level per kilo, according to CLIVE’s analyses. Overall, international rates rose 10 per cent month-over-month.

Load factors out of APAC Westbound in October 2021 stood at 91 per cent, while Eastbound also produced a strong 89 per cent. Some mid-tier markets in Asia, such as Vietnam and Malaysia, showed the highest Spot rates – between 9-10 USD per kg for Spot shipments into Europe. In comparison, Hong Kong, in the last week of October, was close to 7 USD per kg.

“With loadfactors up 2 per cent pts versus September, you can see the build up to the peak season but, admittedly, demand is not yet as high as some stakeholders had feared (or hoped). Capacity on a like-for-like basis (compared to September 2021) was more or less flat (+1 per cent) and, combined with a load factor of 68 per cent, this does not seem to indicate the final sprint to the end of the year has started,” said Niall van de Wouw, CLIVE’s Managing Director. “October was a steady month in the market overall with some strong seasonality factors, but the dynamic loadfactor was lower than anticipated given the strong week-over-week increases we reported in September. A global dynamic loadfactor of 68 per cent does show how efficiently the market is currently operating in terms of matching supply and demand.”

CLIVE’s ‘dynamic load factor’ analysis refreshes the way air cargo capacity usage is traditionally measured to reflect modern day reality. It is based on the fact that airlines’ cargo capacity nearly always ‘cube out’ before they ‘weigh out’ as a result of an aircraft’s higher capacity density (available kgs per cubic meter) than the average density of the goods moved by air. Consequently, CLIVE says, traditional load factors, based only on weight, underestimate how full planes really are, and thus give a distorted picture of how the industry really is performing.

CLIVE’s air cargo industry intelligence consolidates data shared by a representative group of international airlines operating to all corners of the globe. Based on both the volume and weight perspectives of the cargo flown and capacity available, it uses weekly analyses to give the air cargo industry the earliest possible barometer of market performance each month.

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