Month-on-month volumes were down 1.2% but this was nothing to do with a lack of demand. In Europe, severe congestion has been reported at several major hubs, with cargo not making it onto flights due to a lack of staff at handling agents. The fall came despite capacity rising 0.5%, and rates increasing by 8% month-on-month.
Speaking to journalists, Niall van de Wouw, Managing Director of CLIVE Data Services said November volumes being below October was remarkable, as was the fact that rates went up despite load factors also falling. This paradox was caused by issues on the ground limiting the amount of air cargo that can move, he said.
“Goods are not ¬flowing as well as they did a few months ago, there are labour issues on the ground and for the first time, we have seen it manifested in the data. Despite the fact that there’s such a demand to get goods from A to B, the industry as a whole is less efficient because of congestion at airports,” said van de Wouw.
In October, volumes were up 3% on 2019 but are now minus 3% but this is not due to a lack of demand, there is a bottleneck on the ground due to a lack of staff. The issues facing airfreight are similar to transpacific sea freight congestion with ships stuck outside US West Coast ports.
Volumes at the sea ports have been called sub-seasonal but again, this is not due to a lack of demand but a lack of staff to process the cargo.
“From an analyst point of view, it is a fantastic puzzle to try and make sense of the, at face value, conflicting signals that we see in the data,” he commented.
The dynamic load factor has not been as strong as expected, in fact it was ¬flat in October remaining around the 68% mark, which is still high but it was looking like it could exceed 70%. It went down to 66% in the first two weeks of November before going up to 67%, putting it at 2018’s peak season level, which was a strong year.
“This was quite unexpected but two months ago, we did say the logistics chain was getting fragile. I think the industry as a whole is paying the price for the lack of investment and attention for ground handling,” he said.
Opening up the transatlantic raised hopes of providing relief but this has not happened because now passengers are ¬flying again, their luggage is taking up space previously reserved for cargo.
Measured in cubic metres, at the start of the year capacity per ¬flight on aircraft such as Boeing 777s or Airbus A350s was around 140m³. Capacity fell over the summer holidays because of luggage being transported and the same thing happened when the US reopened to European travellers.
“We see quite a steep drop for all aircraft types ¬flying into the US. I’ve spoken to one airline and they said the moment it reopened, the bookings flooded in and that really affected capacity on passenger flights,” said van de Wouw.
Load factors from Europe to North America have been pushed up from around 81% in late October to the mid 80s with some routes, such as Los Angeles and San Francisco nearer the 90% mark. Transatlantic rates were up 10%.
Van de Wouw said: “Our hypothesis, at least for the first few weeks proved correct that opening up the US did not provide relief but is actually putting more pressure on the supply chain because capacity is being taken by luggage.”
With the conflicting signals, November has been a fascinating month but frustrating for those in the supply chain with cargo not being moved and uncertainty about when goods will arrive despite the high prices forwarders and shippers are paying.
Van de Wouw concluded: “We believe the spotlight should be on the handling and how that is affecting the efficiency of the global supply chain in a negative way.”
