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COVID-19 impact on the air cargo industry

How air cargo is enabling global trade during the pandemic

January 25, 2021

With ecommerce on the rise and the pandemic approaching a second year, could air cargo operations help to build a more resilient aviation industry?
Risque de pandémie

Only diehard optimists would call the air cargo business a ‘bright spot’ for an aviation industry whose fortunes have been grounded by the global COVID-19 pandemic.

Recent data from the International Air Transport Association (IATA) – even amidst small signs of recovery – revealed that global volumes fell 6.6% in November compared to 2019; and international cargo down a comparative 7.7%.

Yet, from an economic standpoint, it is safe to say airports and airlines with cargo-diversified revenue streams beyond traditional passenger-related income have largely managed to avoid the worst of the pandemic’s ravages.

Global passenger demand and capacity had fallen 70.3% and 58.6%, respectively, over the same period

With IATA indicating that global passenger demand and capacity had fallen 70.3% and 58.6%, respectively, over the same period (forward bookings are also off about 79% year-on-year) it is easy to see why cargo’s fortunes could be viewed favourably by observers searching for a silver lining, as the pandemic approaches a second year.

However, news of COVID-19 vaccines available for distribution round the world has buoyed industry practitioners both above and below deck. Cargo carriers with climate-controlled facilities have a business opportunity in the worldwide distribution of billions of doses of vaccines; while passenger airlines believe the vaccines will help to slow the spread of the virus and ultimately remove the current restraints on travel.

In the interim, there are opportunities to prepare for the future, according to Glyn Hughes, the out-going head of IATA Cargo and the newly appointed director general of The International Air Cargo Association.

“Although the COVID-19 crisis has brought a spotlight on air cargo… despite the global lockdown, the global pandemic has also highlighted the urgent need for air cargo to accelerate its digital and sustainable transformation, to develop collaborative business models and speak with a united voice to emerge from this unprecedented crisis more resilient,” he recently told the media.

While broadly destructive for aviation, the pandemic has also hastened a global transition to ecommerce in a way that is destined to benefit all providers of cargo transportation

While broadly destructive for aviation, the pandemic has also hastened a global transition to ecommerce in a way that is destined to benefit all providers of cargo transportation. According to one recent estimate from IBM, the pandemic may have accelerated the global transition to ecommerce by five years.

Some freight-focussed aviation facilities, such as East Midlands Airport (EMA), are in a position to take advantage of the market shift; as ecommerce volumes accelerated during the pandemic, freighter movements through the airport were also boosted by the sudden decline of cargo space offered by far fewer passenger flights.

In a recent interview Willis Towers Watson conducted with Stephen Harvey, Head of Cargo at EMA, (part of the Manchester Airport Group), stated that EMA saw a 10% bump in freighter movements at the end of March 2020 as Britain and other EU countries scrambled for medical equipment. At the height of the pandemic’s first wave, it saw a 20% increase in the volume of goods being handled as weekly flights from China and Hong Kong - as well as via Moscow into UK – transformed the airport’s hub status.

EMA was previously seen as a cargo hub for the U.K., but COVID-19 has transformed it into a European cargo hub, Stephen Harvey, said.

“In no way has freight cargo reversed the damage that has been done to airports and their operations [during the pandemic],” Harvey said. “But our established freighter operations did allow us to be a bit more resilient during this tough time.”

EMA and the 90 other businesses that comprise its onsite cargo-related ecosystem employ about 9,500 people; global integrators such as DHL, UPS and FedEx, as well as the Royal Mail, all have a presence at the airport, making it the U.K.’s second largest air cargo operation behind London Heathrow Airport.

According to Harvey, the pandemic helped operators to grow the airport’s cargo ecosystem (there have been nights where they were handling over a million parcels) and prepare for the future. Outside its existing business cluster, new recognition for EMA’s cargo capabilities have grown amongst foreign manufacturers, which bodes well for a further expansion of its ecosystem.

EMA cargo managers already knew that online ordering would shape the industry’s future, but the pandemic provided a snapshot of what that meant for local freight transport providers, and that there is no turning back.

In general, the air cargo business in Europe, which traditionally produces just under a quarter of the world’s total volume, has been significantly weakened by the pandemic; total demand was off 13.4% year on year in November 2020, according to IATA’s latest data.

A similar decline was found in the Asia Pacific region, the world’s biggest market, where demand fell a comparative 10.6% in November. The Middle East, which represents about 13% of the global market, faired somewhat better in November when volumes fell by just 2.3% year on year.

Just 1% of global trade moves by air, but that 1% represents 35% of global trade by value, according to IATA

Just 1% of global trade moves by air, but that 1% represents 35% of global trade by value, according to IATA, a fact that has air cargo results closely scrutinised by economists looking for forward financial indicators.

More positive signs came from the North American air cargo market; the region’s air cargo demand rose 5% in November, signs of fledgling recovery from the long pandemic lead recession.

Hartsfield Jackson Atlanta International Airport (HJAIA) is a hub for international flights, the hardest hit sector in global aviation. In a recent interview with Willis Towers Watson, Elliot Paige, the airport’s Director of Air Service Development remarked that at the nadir of the pandemic’s first wave, 90% of its passenger flights were grounded.

With 50% of the world’s air cargo carried in the belly of passenger aircraft, HJAIA's freight fortunes also fell. But cargo proved to be more resilient and was ‘basically flat’ year on year in September, Paige said.

HJAIA has a reputation for being a technologically advanced hub on the cargo front; it worked with ground handlers and road transport firms that serve the airport to forming in 2019 the first digital air cargo community in the Americas.

This digital platform went ‘live’ in November 2019, just before the COVID-19 outbreak, and the airport is now mentoring other airports in the U.S. and Canada. Driving transactional efficiency may have been the original goal, but other benefits such as having fewer vectors for disease transmission came to light after the outbreak, not to mention the efficiency of tracking and tracing every vaccine shipment.

With ecommerce on the rise, IATA and other industry bodies have been stressing the need to improve shipment-tracking technology, in part to better monitor and secure the flow of global trade’s highest-value goods, which typically move by air.

With COVID-19 vaccines being distributed, HJAIA's digital capabilities can support secure delivery and assure product continuity. It will also enable more efficient communication with its partner airports in Europe that use similar systems.

“Digital is the future” Paige said, “so why not be ahead of the trend.”


CEO, Global Aviation & Space

Assistant Vice President,
Aerospace — North America

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