Air freight load factors rise to a new high

Air freight load factors rose to a new high in the week to 14 June thanks to a week-over-week reduction in capacity in the past three weeks combined with a slight rebound in air freight volumes in the first two weeks of June, according to new figures from CLIVE Data Services.

According to the latest figures from the air freight data specialist, air freight load factors – using CLIVE’s ‘dynamic load factor’ analysis method – in the week to 14 June reached their highest level since CLIVE began measuring market performance in 2018. Indeed, the dynamic load factor has been at record highs in four of the last five weeks.

Niall van de Wouw, managing director of CLIVE Data Services, told Lloyd’s Loading List: “Our analyses shows that the global capacity, in cubic metres, has decreased – relative to the previous week – three weeks in a row”, falling 1.2% in week 22; dropping 1.8% in week 23 and declining a further 3.2% in week 24.

As reported yesterday in Lloyd’s Loading List, some freight forwarders have reported that there had been a reduction in the number of ‘passenger freighters’ operating in the last few weeks, which would seem consistent with these observations by CLIVE.

Regarding demand levels the volumes in chargeable weight, CLIVE said the week-over-week pattern was: week 22 was down by 3.7% compared with the previous week; week 23 was +2.4%; and week 24 was +2.4%. So, although May saw a small drop in air freight demand in the second half of the month, June has seen a small recovery.

“Yes, we indeed see a rebound relative to the drop during the last two weeks of May,” confirmed van de Wouw. “Last week’s volumes were similar to the volumes seen mid-May.”

He continued: “Clearly the air cargo industry continues to face very difficult market conditions, but our latest data for the week of 8-14 June shows a global ‘dynamic loadfactor’ of 71%, which is the highest level since we began measuring the ‘dynamic loadfactor’ in 2018. Given the week-over-week reduction in capacity, growth in volumes and the lesser dependence on lanes with large imbalances (ex-China and Hong Kong), and considering the trade imbalances that do exist, this suggests the level of capacity utilization must be reaching the practical maximum.”

As reported yesterday in Lloyd’s Loading List , freight forwarders and their customers are adapting to a fast-changing air freight environment, with some continuing to operate substantial COVID-19 air charter programmes while others report a slowing in global demand in recent weeks for urgent PPE shipments. And although there is still a relatively high level of ‘passenger-freighter’ operations helping to limit the need for cargo charter flights, some ‘passenger-freighter’ operations are now dropping away.

A spokesperson for freight forwarder DSV told Lloyd’s Loading List: “We can confirm that the pax freighters have dropped off to a great extent. This is directly related to the charter pricing, which also dropped in recent weeks. The pax freighters came in handy when the charter prices were high and have added much-needed capacity as well as direct routes to destinations otherwise not currently serviced by freighters. 

“DSV has organised a significant number of charter flights related to Covid-19 in recent months. Our charter activities, including our own-operated charter network, continue, but as regular commodities have started to pick up again, our focus has partly shifted away from PPE.”

Preliminary air cargo figures from WorldACD Market Data highlight a gradual weekly drop of worldwide average prices during May, along with demand levels recovering from their heavy declines in April, confirming anecdotal reports of air freight’s slow recovery.

WorldACD noted that the most striking features of the market during May were the continuous weekly drop of worldwide US$ yields – from US$4.29 in the first days of the month to an average of US$3.52 for the last week, along with the daily pattern of demand levels recovering from the heavy declines in April.

Although worldwide chargeable weight carried by air in May 2020 decreased by 29% compared with May 2019 (year-over-year, YoY), this “showed a slight improvement” compared with April, when demand fell YoY by 34%. The improvement was also visible month-over-month (MoM), as May showed an increase over April of 11%, WorldACD highlighted.

In terms of yields or rates, WorldACD said there had been a further rise in May, after “a completely uncommon 63% MoM increase in April, when a good part of cargo capacity suddenly ‘disappeared’ as passenger aircraft stopped being operated”. The MoM increase in May was 5%. 

“In other words, worldwide yields/rates still went up, from US$3.74 to US$3.95, in spite of additional capacity coming to the market by an increasing number of passenger aircraft being (partly) converted into freighters,” WorldACD said. 

“Although this small recovery does not promise a full rebound any time soon, in a number of markets some guarded optimism may be justified.”