Global Air Cargo Tonnages Plummet in Mid-August Due to Japan Typhoon and European Holidays
In mid-August, the global air cargo industry experienced a significant downturn, primarily driven by a series of unfortunate events in both Asia and Europe. During week 33, which spanned from August 12 to 18, air cargo tonnages saw a sharp decline of 7 percent compared to the previous week. This decline was not evenly distributed across regions; instead, it was predominantly felt in the Asia Pacific and Europe, with these areas experiencing declines of 9 percent and 11 percent, respectively. The data, derived from an analysis of over 450,000 weekly transactions, revealed that the majority of the decline in the Asia Pacific region could be attributed to a substantial 47 percent drop in tonnages originating from Japan. This dramatic reduction was largely the result of a typhoon that hit Japan, leading to widespread flight cancellations and disruptions in air traffic to and from South Korea.
The impact of the typhoon in Japan was profound, causing logistical nightmares for air cargo operators. The natural disaster resulted in a nearly 50 percent drop in air cargo tonnages from Japan alone, which significantly skewed the overall figures for the Asia Pacific region. Flights were canceled en masse, and the ripple effects were felt in neighboring countries, including South Korea, though to a lesser extent. This disruption underscores the vulnerability of the air cargo industry to sudden and severe weather events, which can cause immediate and widespread operational challenges. While Japan bore the brunt of the typhoon’s impact, the entire Asia Pacific region felt the aftershocks, contributing to the overall decline in global air cargo tonnages during this period.
Meanwhile, in Europe, the decline in air cargo tonnages was largely attributed to the holiday season, particularly the widespread observance of a holiday on August 15th. Countries such as France, Italy, Spain, Germany, and Belgium saw significant reductions in holiday-related shipments. This seasonal dip is a common occurrence, as many businesses in these countries either shut down or scale back operations during the holiday period, leading to a temporary decrease in air cargo volumes. When adjusting for the effects of the typhoon in Japan and the European holidays, the global decline in air cargo tonnages would have been limited to only 2 percent instead of the reported 7 percent. This adjustment aligns with a slight weakening trend in global air cargo performance compared to July, indicating that the industry is facing broader challenges beyond these specific events.
Despite the notable drop in mid-August, it’s important to recognize that global air cargo tonnages were still up by 9 percent compared to the same period last year. This year-on-year increase suggests that the industry has made significant strides in recovering from the lows experienced during the height of the COVID-19 pandemic. However, the recent events highlight the ongoing volatility and susceptibility of the air cargo sector to external shocks. In addition to the tonnage data, average worldwide air cargo rates also saw fluctuations. Rates increased by 1 percent to $2.49 per kilo, with rates from the Asia Pacific region rising by 2 percent, while rates from Africa decreased by 2 percent. These changes reflect the dynamic nature of the market and the varying supply and demand conditions across different regions.
Year-on-year, average worldwide prices were up by 11 percent, driven primarily by significant increases from the Middle East & South Asia, which saw a 57 percent rise, and the Asia Pacific region, which experienced a 22 percent increase. These price hikes are indicative of the growing demand for air cargo services in these regions, coupled with capacity constraints that have driven up costs. Interestingly, the increases in demand have led to capacity increases on head-haul legs, resulting in price drops on backhaul lanes from Europe (down 11 percent) and North America (down 8 percent). This phenomenon illustrates the complex interplay between supply, demand, and pricing in the global air cargo market.
Amidst these industry-wide trends, individual airlines and companies have been navigating their own unique challenges and milestones. For instance, Swedish airline SAS successfully emerged from US Chapter 11 bankruptcy proceedings with a stronger balance sheet and new ownership. The restructuring process involved reorganizing $2 billion in debt and adjusting the fleet, positioning the airline for a more stable future. Similarly, ATR, a regional aircraft manufacturer, marked a significant milestone by delivering its 1,700th aircraft, an ATR 72-600, to Air Corsica. These developments highlight the resilience and adaptability of companies within the air cargo and aviation sectors, even as they contend with broader market fluctuations.
In the realm of corporate expansions and strategic appointments, ASQS appointed Florian Lis-Srajer as Head of Operations Thailand in September, underscoring their commitment to the Asian market for integrated safety and quality management software. Meanwhile, Collins Aerospace broke ground on its expansion at the Spokane carbon brake production facility, with local officials, community leaders, and industry partners celebrating this milestone. These moves reflect ongoing investments in infrastructure and human capital aimed at enhancing operational capabilities and market reach.
On the technological front, KLM received its first Airbus A321neo, joining other successful operators of this aircraft type. This addition to KLM’s fleet represents a step forward in modernizing and improving the efficiency of their operations. Additionally, Dubai Aerospace Enterprise announced agreements to acquire 23 aircraft for approximately $1.1 billion, which will bring their consolidated aircraft portfolio to an average age of 3.4 years. Such acquisitions are indicative of strategic efforts to expand and modernize fleets, ensuring competitiveness in a rapidly evolving market.
Looking ahead, projections indicate that China is set to double its commercial airplane fleet by 2043, driven by the growing demand for both passenger and cargo air travel. This anticipated growth underscores the importance of the Asia Pacific region in the global aviation landscape and highlights the need for robust infrastructure and strategic planning to accommodate the increasing volume of air traffic. The projected expansion of China’s commercial fleet also points to potential opportunities and challenges for the global air cargo industry, as it adapts to shifting dynamics and emerging markets.
Beyond the immediate impacts of the typhoon and European holidays, the air cargo industry continues to grapple with broader issues such as legal disputes and regulatory challenges. For example, a lawsuit has been filed against Jetstar in Australia on behalf of passengers whose flights were canceled during COVID-19 without refunds being provided. This legal action highlights ongoing concerns about consumer rights and the responsibilities of airlines in managing disruptions. Similarly, families of victims from two Boeing 737 Max8 crashes have filed a brief urging a US federal court judge to reject a proposed plea agreement, underscoring the enduring legal and ethical implications of aviation safety incidents.
In the financial arena, Singapore-based SATS reported a net profit of S$65 million in the first quarter of its financial year, reflecting a recovery in demand for its services. Meanwhile, Blueflite in Australia has partnered with local entities to address the growing demand for safe storage of hydrogen fuels for unmanned aerial vehicles (UAVs), highlighting the intersection of technological innovation and sustainability in the aviation sector. These financial and technological developments illustrate the diverse and multifaceted nature of the challenges and opportunities facing the air cargo industry.
Lastly, in the realm of strategic partnerships and acquisitions, Travelport has extended its agreement with Turkish Airlines to enhance the carrier’s modern retailing capabilities. This extension signifies ongoing efforts to leverage technology and partnerships to improve customer experiences and operational efficiency. Additionally, Lufthansa Technik’s acquisition of a majority stake in ETP Thermal Dynamics expands its aircraft component services, further solidifying its position in the market. These strategic moves underscore the importance of collaboration and innovation in navigating the complexities of the global air cargo industry.