COVID-19: IATA says world faces ‘severe cargo crunch’ as virus wreaks havoc globally

Association says governments and regulators need to cut paperwork for charter operations, exempt cargo crews from quarantine rules and ensure adequate staff and facilities to process cargo efficiently; IATA reschedules 'real' AGM for November, not a virtual meeting.

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Air cargo currently is one of the brighter spots in international aviation although it too has been impacted like passenger carriers due to border closures. (PHOTO: Korean Air)

Just when the world needs medical personnel and protective equipment to be free to move more than ever as the COVID-19 pandemic has infected more than 3 million people and killed more than 200,000, the main trade body for the global aviation industry, the International Air Transport Association (IATA) is warning that governments and regulators need to do more to make it easier for the air cargo industry to move critically needed supplies.

A screenshot taken on 29 April of the virus tracking website at Johns Hopkins University. To access the live site, click on the image. (PHOTO: Matt Driskill)

“At present, we don’t have enough capacity to meet the remaining demand for air cargo. Volumes fell by over 15 percent in March compared to the previous year. But capacity plummeted by almost 23 percent. The gap must be addressed quickly because vital supplies must get to where they are needed most,” said Alexandre de Juniac, IATA’s director general and CEO. “For example, there is a doubling of demand for pharmaceutical shipments that are critical to this crisis. With most of the passenger fleet sitting idle, airlines are doing their best to meet demand by adding freighter services, including adapting passenger aircraft to all-cargo activity. But mounting these special operations continues to face bureaucratic hurdles. Governments must cut the red tape needed to approve special flights and ensure safe and efficient facilitation of crew.”

IATA said in a statement there “are still too many examples of delays in getting charter permits issued, a lack of exemptions on COVID-19 testing for air cargo crew, and inadequate ground infrastructure to and from and within airport environments. Air cargo needs to move efficiently throughout the entire supply chain to be effective”. IATA wants governments to:

  • Cut the paperwork for charter operations;
  • Exempt cargo crew from quarantine rules that apply to the general population;
  • Ensure there is adequate staff and facilities to process cargo efficiently.

As part of IATA’s extensive communications outreach, the association also released air cargo performance data for March that showed a “severe capacity shortfall”. Global demand, measured in cargo tonne kilometres (CTKs), fell by 15.2 percent in March compared to the previous year (-15.8 percent for international markets). Global capacity, measured in available cargo tonne kilometres (ACTKs), shrank by 22.7 percent in March compared to the previous year (-24.6 percent for international markets).

  • Download the full IATA cargo market analysis here.
  • Listen to the IATA media call here.

International markets account for 87 percent of air cargo. Belly capacity for international air cargo shrank by 43.7 percent in March compared to the previous year. This was partially offset by a 6.2 percent increase in capacity through expanded use of freighter aircraft, including the use of idle passenger aircraft for all-cargo operations.

While there is an immediate capacity shortage, the collapsing economy is expected to further depress overall cargo volumes. IATA said its short-term analysis shows that global manufacturing activity continued to contract in March as government-imposed lockdowns caused widespread disruptions. Following the sharp decline in February, “which exceeded that of the global financial crisis”, the global manufacturing Purchasing Managers’ Index (PMI) rose slightly in March but remained in contractionary territory. This improvement was due to the stabilisation of the China PMI; excluding the China outcome, the global index fell to its lowest level since May 2009.

“Looking at the prospects for the rest of 2020, the World Trade Organisation forecast gives little indication of a quick recovery. The optimistic scenario is for a 13 percent fall in trade in 2020, while the pessimistic scenario sees a 32 percent fall in trade in 2020. This will deeply impact air cargo’s prospects, IATA said.

One area of demand, however, is growing sharply. Pharmaceutical shipments are tracking at double previous-year volumes. This excludes shipments of medical equipment.

Airlines like Cathay Pacific have had to ground hundreds of planes as they deal with the fallout from the COVID-19 virus, which has a major impact on cargo. (PHOTO: Shutterstock)

“The capacity crunch will, unfortunately, be a temporary problem. The recession will likely hit air cargo at least as severely as it does the rest of the economy. To keep the supply chain moving to meet what demand might exist, airlines must be financially viable. The need for financial relief for airlines by whatever means possible remains urgent,” said de Juniac.

Alexandre de Juniac, director general of IATA.

De Juniac also warned that some governments were finding it difficult to meet their funding requirements for the International Civil Aviation Organisation (ICAO) and said now was not the time to cut back on their commitments to the UN organisation. ICAO “is the global standard setter for aviation. The industry is in its biggest crisis ever, suffering even more than most other economic sectors. We were shut down by unilateral actions of governments. But the restart will require governments to work together. We need a strong ICAO now more than ever. In recent weeks we have heard that some states are finding it difficult to meet their funding commitments to ICAO. We understand that the demand on state resources is great. But I encourage them to prioritise keeping ICAO strong. At least 25 million jobs that depend on aviation—directly or indirectly—are at risk in this crisis. An orderly restart for aviation needs coordination that only ICAO can provide. This will be critical for the economic recovery from the COVID-19 crisis,” de Juniac said.

March Regional Performance

Asia-Pacific airlines saw demand for international air cargo fall by 15.9 percent in March 2020, compared to the year-earlier period. Seasonally adjusted cargo demand fell by 3 percent compared to February 2020, to levels last seen in the third quarter of 2013. International capacity decreased 27.8 percent.

 

North American carriers reported a decline in international demand of 13.3 percent annually in March which was more than double the pace of decline in February (-6.1 percent). Cargo volumes on the Europe-North America trade lane were affected the most (down 22 percent year-on-year) in March. International capacity decreased 19 percent.

covid-19-iata-says-world-faces-severe-cargo-crunch-as-virus-wreaks-havoc-globallyEuropean carriers reported an 18.8 percent annual drop in international cargo volumes in March, much sharper than the outcome for February (-5.2 percent). Intra-Europe demand declined by 32.6 percent year-on-year due to widespread shutdowns in the manufacturing sector across the region. The larger Europe-North America and Europe-Asia markets also recorded substantial declines this month. International capacity decreased 27.6 percent.

covid-19-iata-says-world-faces-severe-cargo-crunch-as-virus-wreaks-havoc-globallyMiddle Eastern carriers reported a decline of 14.1 percent year-on-year following growth of 4.3 percent in February. Among all routes to and from the Middle East, the sizeable Europe and Asia trade lanes recorded falls in the order of 20 percent in March, while the smaller

 

Latin American carriers posted the sharpest fall, a 19.3 percent year-on-year decline in international demand. This was a significant deterioration compared to February (-0.5 percent). Declines were widespread but most severe for Central-South America with volumes down around 35% year-on-year. International capacity decreased 37.6 percent.

African airlines were less affected by disruptions in March. They saw year-on-year growth in international CTKs fall by 1.2 percent following the positive annual outcomes in January and February. The Africa-Asia market was the only trade lane which continued to post growth in March, with volumes up almost 10 percent year-on-year. International capacity decreased 8.2 percent.

IATA AGM rescheduled for November

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Alexandre de Juniac, IATA’s director general. (PHOTO: IATA file)

In addition to the cargo report, IATA said it had rescheduled its 76th annual general meeting (AGM) and World Air Transport Summit for 23-24 November in Amsterdam. The dates were selected in anticipation that government restrictions on travel will have been lifted and that the public health authorities in the Netherlands will permit large gatherings at that time. IATA will work with public health authorities to ensure that all precautions are taken for the meeting to be held safely.

“The fight against COVID-19 is the world’s top priority. The economic and social cost of beating the virus will be high. The extreme financial difficulty of the airline industry is a prime example of that. In the post-pandemic world, a viable air transport industry will be critical. It will be a leader in the economic recovery by performing its traditional role of linking people, goods and businesses globally. But we will be a changed industry. In anticipation that the world will have returned to sufficient normality by November, we will gather the world’s airlines to look ahead together as we address the biggest challenges we have ever faced. Aviation is the business of freedom. We are resilient. And this AGM will help us to build an even stronger future,” said IATA’s de Juniac.

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