Air Cargo During the Pandemic

Overview

• Early 2020: Air travel nearly halted due to the pandemic.
• April 2020: Over 16,000 planes (more than half of the global fleet) were parked.
• Passenger planes also carry a significant amount of cargo (52 million metric tons/year).

Financial Impact on Airlines

• Q1 2020: Major losses reported by American Airlines and United due to decreased passenger flights.
• Cargo became a lifeline as passenger numbers dropped.
• Some airlines shifted to cargo-only flights to adapt.

Adaptation and Growth in Cargo Operations

• Airlines like American Airlines quickly adapted by using widebody aircraft for cargo operations.
• Rapid increase in air cargo volumes (18.7% rise in 2021).
• Air freight prices increased significantly to meet demand.
• E-commerce giants shifted supply chains, increasing demand for air cargo.

Challenges and Market Dynamics

• Demand slowed due to geopolitical tensions (Russia-Ukraine war) and economic concerns.
• FedEx reported closing offices and parking planes due to decreasing global shipment volumes.
• Air cargo represented only 1% of trade by volume but 35% of trade by value (over $6 trillion).
• Cargo yields increased, allowing airlines to cover operational costs with cargo alone.

Importance of Air Cargo

• Air cargo is crucial for fast-moving consumer goods, medical supplies, and perishable items.
• Airlines have a long history of carrying cargo, dating back to transporting mail.
• Unique shipments include medical organs, exotic animals, and luxury vehicles.

Industry Trends and Future Outlook

• Increased demand for e-commerce led to a rise in air cargo operations.
• Major manufacturers (Boeing, Airbus) responding with dedicated cargo aircraft and conversions.
• The conversion process for passenger planes to freighters increased significantly, with 150 conversions in 2021.

Economic Considerations

• Growing demand for air cargo may not be sustainable in the short term due to economic slowdowns.
• Recent softness in demand but still higher than pre-pandemic levels.
• E-commerce will continue to drive long-term growth in air cargo, especially in undeveloped regions.
• The pandemic highlighted the essential role of air cargo in global life and economy.

Conclusion

• Air cargo has gained newfound appreciation due to its role in logistics during the pandemic.
• The industry is adapting to meet ongoing changes in demand and supply chain dynamics.