The air freight market is poised to fully recover to pre-pandemic levels in the first quarter of 2021, according to a recent forecast from the International Air Transport Association (IATA) and data from CLIVE Data Services.

The impending recovery is evidenced by the industry’s strong performance in December in comparison to the damage caused by COVID-19 earlier in the year. In April, demand fell a whopping 37% year-over-year as the economy first began to shut down. In the final month of 2020, the decline narrowed to just 5% year-over-year. In fact, air cargo volumes have been recovering since June, only dipping 1% in November then quickly rebounding again in December.

Additionally, global airfreight volumes grew by 2.5% on a sequential basis in December, with the industry showing the first positive year-over-year growth in weekly volumes in over 12 months. According to CLIVE, volumes for freight forwarders and cargo airlines increased 8% in the two weeks since December 21, and the load factor for the week was 13 points higher than the same period the previous year, reaching 65%.

Throughout December 2020, cargo planes were 71% full on average, which is notably high for the industry. According to the TAC Index, rates have also either remained stable or increased in December, with westbound pricing significantly higher than eastbound rates. For instance, Shanghai-to-Europe prices are 4x higher than those from Frankfurt to China and the U.S. That said, rates from China to major U.S. and European cities are still 35% higher than in October during the beginning on the peak season – as well as 150% higher than last year’s levels during this time.

The positive growth in the market is largely due to rising e-commerce orders and a rebound in manufacturing, as well as the release of the COVID-19 vaccines. For instance, Air Transport International (ATI), a contract air cargo carrier and subsidiary of Air Transport Services Group (ATSG), has received a $7.7 million order for transportation services in support of Operation Warp Speed, the U.S.’s national vaccine campaign. ATSG and ATI have reported adjusted corporate earnings up 48% in the third quarter of 2020, a sure sign of the market’s recovery.

In response to the increased demand, many cargo companies are continuing to add incremental capacity; overall capacity grew by 2% from November to December.

The passenger airline market, on the other hand, has not weathered the pandemic nearly as well; the industry is not expected to fully recover for another three years. In the meantime, many passenger airlines are offering cargo-only services to make use of their otherwise empty passenger planes. However, with the tremendous dip in passenger flights, the capacity shortage remains 21% lower than that of 2019.

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