Page 11 - AAA JUNE - JULY 2022 Online Magazine

Added Woes Turning to Air
While the war in Ukraine has forced affected Cargo owners are increasingly switching from sea to air. In 2021,
carriers either to take lengthier routes or cancel with port congestion and a narrowing price gap, the airfreight market
flights, the lockdowns in Shanghai, China, and grew twice as fast as sea cargo. Furthermore, according to a new
staffing difficulties at ports have slowed port white-paper by Ti Research, the global freight forwarding market
operations, reduced product availability and bounced back to enjoy the strongest market growth since 2011,
stymied truckers. The rising prices of fuel have recording 11.2 per cent growth in real terms, to US$284.9bn.
added to the carriers’ woes. “The international
sanctions against Russian carriers, the clo- It was a strong performance following one of the most challenging
sure of Russian airspace and the associated years to date, amid the Covid-19 pandemic, Ti noted, with global trade
daily changes in circumstances are increasing growing 13 per cent to a record high of US$28.5trn. “The strong
the volatility of the market,” according to DB growth in international trade in 2021 was mainly the result of pan-
Schenker. International Air Transport Association demic restrictions being phased out, and surging demand for goods
(IATA) and Clive Data Services noted that air encouraged by government support schemes and economic stimulus
cargo demand and global air cargo volumes packages introduced in many countries,” the report said.
declined in March and April this year as man- Nevertheless, the air freight industry still has its own capacity con-
ufacturing and supply chains were adversely straints to contend with, despite record numbers of charter flights
affected by the Russian-Ukrainian conflict and from Asia laid on to carry e-commerce cargo. “Adding air freight
the COVID-19 pandemic. capacity to key trade lanes has been a key objective for forwarders
over the past year,” Ti noted, but added: “Demand for air freight
Upbeat Forecast capacity continues to outstrip supply, contributing to increased yields
IATA highlighted the potential for a return to and revenues among airlines. “Even though air cargo capacity grad-
global industry profitability next year as passen- ually increased during 2021 due to improvements in international
ger business recovers from a two-year tailspin. passenger traffic, it was still 10.9 per cent below 2019.”
Overall, IATA said airlines are expected to reduce
their losses to US$9.7 billion, US$2 billion better Core Source of Revenue
than what it was predicting in October, from Cargo is a core source of revenue for every passenger airline,
US$42.1 billion last year and US$137.7 billion in but it has not always accounted for a large percentage of airline
2020 as the pace of recovery from the COVID revenue for passenger carriers, that are not also operating freight-
crisis picks up. Airlines suffered a net loss of 8.3 ers. Nonetheless, with most airline operating margins in the single
per cent and 36 per cent respectively during the digits prior to the COVID-19 crisis, cargo revenue has meant the dif-
previous two years, but margin loss will shrink to ference between profit and loss on most intercontinental passenger
1.2 per cent in 2022. Strong pent-up demand, the wide-body routes. According to estimates more than 10,000 aircraft
lifting of travel restrictions in most markets, low out of a global fleet of 35,000 are currently parked or stored. The
unemployment and increased personal savings downturn in passenger traffic during the global pandemic has many
are driving strong bookings through the summer, carriers re-thinking their fleet plans.
with IATA anticipating passenger throughput will
reach 83 per cent of the pre-crisis level in 2022. Freighter Conversions Demand
International travel is finally gathering momentum One element in long-term planning is alternative uses for aircraft.
after being hindered by COVID controls. “All of a sudden, cargo has changed from a contribution to fixed

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