Global air cargo drops 4% with Lunar New Year

The global air cargo market saw a 4% year over year decline in the four weeks between Jan. 6 and Feb. 2, according to startup CLIVE Data Services’ most recent “dynamic load factor” report, a new system of analysis that measures cargo-load factors from a volumetric, rather than weight-based, approach. The dynamic load factor also fell 2 percentage points to 65% during this time, compared with the same period last year.

The four weeks of data largely reflects the influence of the Lunar New Year, which fell one week earlier than in 2019, according to CLIVE’s press release. The company said it is also closely monitoring the impact of the new coronavirus on airfreight volumes, which it expects to be “clearly evident” in dynamic load factor data reports in the coming weeks.

Although the 4% YoY drop in global air cargo from Jan. 6 to Feb. 2 may appear to be quite a setback, relative to the growth numbers seen in the last three months of 2019, the data in more detail tells a more nuanced picture, according to CLIVE Managing Director Niall van de Wouw.

According to CLIVE, because the Lunar New Year is celebrated in such major air cargo origins as China, Hong Kong, South Korea and Singapore, the slowdown in manufacturing and operations in the region pushed the overall growth number down by around 3% for the start of the year. This implies that the “normalized” global market saw a decline of 1%, the press release said.

Further data from CLIVE reveals that in the last week of January, volumes from China to Europe, relative to the same week in 2019, dropped by 66%. Subsequently, the dynamic load factor of westbound flights from China dropped from close to 90% to 74%. The reason for the load factor not dropping further is due to airlines cutting capacity by 44% relative to the same week last year, the press release said. Therefore, most of this fall in capacity was caused by a reduction of freighter services in anticipation of the weaker demand during the Lunar New Year holiday.

“While the industry traditionally anticipates lower demand during Chinese New Year, the big unknown now is the impact of the coronavirus at the start of a year where there was previously slight optimism for a modest recovery in air cargo volumes,” said van de Wouw. “We have already seen airlines suspending passenger services in response to the virus, and now it’s a case of wait and see. The impact of the coronavirus on cargo volumes out of China will become clearer in the weeks to come, when the factories reopen and their supply chains are brought up to speed again. How quickly that will happen — and what knock-on effects it has for global air cargo industry — will be a strong indicator for the year ahead.”