Air shipments, how will that shape after the pandemic?

There continues to be a decline in demand for air shipments worldwide. Analysis of data collected by Clive suggests that there may already be an initial indication of how the post-pandemic sector will develop, especially regarding the North American market.

Data from May shows an 8% decrease in demand compared to the same month in 2019, pre-COVID-19. Although capacity is recovering from last year (+4%), it is still much lower compared to 2019 (-12%).

The combination of these two trends has resulted in the load factor also settling at 60%: a -9% compared to May 2021 and -2% compared to 2019. And consequently, this has also led to a slowdown in the growth of air freight rates. While air freight rates have continued to rise (+16% compared to 2021 and +134% compared to 2019), there has been a deceleration compared to the numbers in April (+26% / +145%).

According to Niall van de Wouw, founder of Clive (now chief airfreight officer of Xeneta), the causes of this decline can be attributed to the ongoing conflict, the "cost of living" crisis (with consumers being more careful and conscious of their expenses), the decline in the stock market, higher interest rates, and COVID-related restrictions in China. This demonstrates how the air shipping market is susceptible to macroeconomic changes.

The situation seems to particularly affect shipments from Europe to North America. In the last 8 weeks, the load factor has decreased from 82% in March to 64% in May – a -7% compared to the May 2021 rate. This decline cannot be solely justified by seasonality.

Despite this, Clive has estimated a slower summer market on transatlantic routes, which may grow in the third quarter of the year but without significant peaks. The American sector will also be affected by port congestion on the US West Coast.

According to van de Wouw, this demonstrates how external events that have nothing to do with air shipments can still have a profound impact on the market.