Thursday, August 11, 2022

Supply Chain Disruptions Halve November Air Cargo Growth

By Staff Correspondent

Geneva – The International Air Transport Association (IATA) released data for global air cargo markets showing slower growth in November 2021. Despite economic conditions remaining favourable for the sector, supply chain disruptions and capacity constraints impacted demand.

As comparisons between 2021 and 2020 monthly results are distorted by the extraordinary impact of COVID-19, unless otherwise noted, all comparisons below are to November 2019, which followed a regular demand pattern.

Global demand, measured in cargo tonne-kilometres (CTKs*), was up 3.7% compared to November 2019 (4.2% for international operations). This was significantly lower than the 8.2% growth seen in October 2021 (2% for global operations) and in previous months.

Capacity was 7.6% below November 2019 (-7.9% for international operations). This was relatively unchanged from October. Capacity remains constrained with bottlenecks at key hubs.

Economic conditions continue to support air cargo growth; however, supply chain disruptions are slowing growth. Several factors should be noted:

Labour shortages created supply chain disruptions, partly due to employees being in quarantine, insufficient storage space at some airports, and processing backlogs exacerbated by the year-end rush. Several vital airports, including New York’s JFK, Los Angeles and Amsterdam Schiphol, reported congestion.

Retail sales in the US and China remain strong. In the US, retail sales were 23.5% above November 2019 levels. And in China, online sales for Singles’ Day were 60.8% above their 2019 levels.

Global goods trade rose 4.6% in October (latest month of data), compared to pre-crisis levels, the best growth rate since June. Global industrial production was up 2.9% over the same period.

The inventory-to-sales ratio remains low. This is positive for air cargo as manufacturers rapidly turn to air cargo to meet demand.

The recent surge in COVID-19 cases in many advanced economies has created strong demand for PPE shipments, which are usually carried by air.

The November global Supplier Delivery Time Purchasing Managers Index (PMI) was at 36.4. While values below 50 are generally favourable for air cargo, in current conditions, it points to delivery times lengthening because of supply bottlenecks.

“Air cargo growth was halved in November compared to October because of supply chain disruptions. All economic indicators pointed towards continued strong demand, but the pressures of labour shortages and constraints across the logistics system unexpectedly resulted in lost growth opportunities. 

Manufacturers, for example, we’re unable to get vital goods to where they were needed, including PPE. Governments must act quickly to relieve pressure on global supply chains before it permanently dents the shape of the economic recovery from COVID-19,” said Willie Walsh, IATA’s Director-General. 

November Regional Performance

Asia-Pacific airlines saw their international air cargo volumes increase 5.2% in November 2021 compared to the same month in 2019. This was only slightly below the previous month’s 5.9% expansion. International capacity in the region eased somewhat in November, down 9.5% compared to 2019.

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