The Impact of Passenger Air Travel on Global Air Cargo

With leisure travel rising post COVID, global air cargo is impacted.
Air freight being loaded onto a plane

As the global pandemic began to take hold in the early months of 2020,  a dramatic shift in the air freight industry happened behind the scenes unbeknownst to the majority of the general public. In January of that year, upwards of 80% of the world’s air cargo was travelling on passenger aircrafts, leaving mostly oversized and overly hazardous shipments to the cargo-only network of planes. 

But as Covid-19 took hold, forcing the cancellation of thousands of flights for travellers, the world’s capacity for air cargo plummeted, shifting the power to freight-only air providers and sending prices for air cargo to record highs. In order to capitalize on a decline in passenger air travel and surging air cargo rates, passenger airlines began to shift their business towards air freight. Many airlines even removed the seats from their planes and converted the passenger cabins to cargo bays to maximize air cargo capacity in their airplanes. This however, still did not make up the significant decline in capacity as a result of reduced passenger air travel.

The trickle down effect then began to take hold across all modes of transport. With the realization that air space was going to be a premium, ocean lines began booking up weeks to months in advance of sailings. 

By the opening months of 2021, the world wide supply chain was in complete disarray. Pricing was out of control and obtaining space, by air, ocean or road, was a daily battle for freight forwarders. 

As we move into our new normal with the global recovery well underway, and passenger flights ramping up to accommodate the pent-up desire for travel, what will be the subsequent effects on the air cargo industry? 

With the resurgence in passenger travel, we can expect a recovery in air cargo capacity. Instead of pricing being dictated by airlines, the power to dictate air cargo pricing could likely shift back to freight forwarders. In 2022, we are projected to see a 47% growth in passenger capacity, and associated growth in air cargo capacity as a result. With capacity increasing, we could see air cargo prices stabilize as airlines compete again to fill out the belly of their aircrafts. 

While the supply of cargo space is increasing and slowly catching up to the demand, it may still take several years for the air freight industry to completely recover from the financial impact left behind by the pandemic. 

The rebound in cargo capacity is a positive indicator for the industry, but some industry experts are still skeptical. There are still a few factors that may affect the outlook of the air freight industry. 

One of the risk factors to the air freight industry is continued congestion at key airports due to labour shortages. Global airlines are struggling with labour shortages post pandemic. Many airlines are still dealing with labour shortages caused by a drop in staff availability and varying vaccination requirements from country to country.

While we would like to believe that the pandemic is behind us, there has been an increase in COVID cases over the course of the last month. In some regions across the globe COVID case counts are up 50%. The increase in cases is driving some countries to reconsider COVID restrictions which could once again negatively impact air cargo capacity.

One of the most important attributes of a good global freight forwarder is the ability to pivot quickly to adapt with the changing logistics landscape. At Liberate Logistics, we pride ourselves on keeping on top of all changes in the market place to ensure our clients are getting the best service at competitive prices.

Reach out to us today for up to the date market information and trends.

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