The recent update of Jul-2020 data shows that air cargo demand is stable but understandably at lower levels than 2019. There is some month-to-month improvement, but it is at a slower pace than some of the traditional leading indicators would suggest, impacted by the capacity constraint from the loss of available belly cargo space as passenger networks remain reduced and many aircraft remain parked.
Global demand, measured in cargo tonne-kilometres (CTKs), fell by -13.5% in July (-15.5% for international operations) compared to the previous year, according to IATA. That is a modest improvement from the -16.6% year-on-year drop recorded in June. Seasonally-adjusted demand grew by +2.6% month-on-month in July.
Notably, economic activity continued to recover in July reflected in the performance of the Purchasing Managers' Index (PMI), an indicator of economic health in the manufacturing sector. The new export orders component of the manufacturing PMI rose by 3.5 points compared to June, and was up 19.8 points since April. The PMI tracking global manufacturing output returned to above 50, consistent with month-on-month growth in output
Business confidence has rebounded as lockdowns end and "high past correlation points to a 'V shaped' recovery in GDP," says IATA's chief economist Brian Pearce.
As economies recover so should air cargo demand, but while loads and yields are projected to remain firm, the slow return of passenger operations and their important bellyhold cargo space will continue to be a major limitation. As an indication, belly capacity for international air cargo shrank by -70.5% in July compared to the previous year. This can only partly be offset through expanded use of freighter aircraft, where capacity rose +28.8% over the same period.
Air cargo has its own vital role to play in the recovery, none more so than in delivering the vaccines around the world, as and when they are scientifically proven effective and, most importantly, safe. Securing a vaccine is a key requirement for many to confidently travel again and is the major pre-requisite in the journey back to some form of normality.
The potential size of the delivery is enormous. Just providing a single dose to 7.8 billion people would fill 8,000 747 cargo aircraft, according to projections. Land transport will help, especially in developed economies with local manufacturing capacity. But vaccines cannot be delivered globally without the significant use air cargo.
IATA has urged governments to begin careful planning with industry stakeholders to ensure full preparedness for when these vaccines for Covid-19 are approved and available for distribution and overcome what it warns could potentially be "severe capacity constraints" in transporting vaccines by air.
Air cargo already plays a key role in the distribution of vaccines in normal times through well-established global time- and temperature-sensitive distribution systems. This capability will be crucial to the quick and efficient transport and distribution of Covid-19 vaccines when they are available, and it will not happen without careful planning, led by governments and supported by industry stakeholders.
"Safely delivering Covid-19 vaccines will be the mission of the century for the global air cargo industry," says IATA's director general and CEO, Alexandre de Juniac.
The piecemeal approach that we have seen to passenger travel does not set a positive prognosis for this critical future scenario. Delivering billions of doses of vaccine to the entire world efficiently will involve hugely complex logistical and programmatic obstacles all the way along the supply chain.
"We urge governments to take the lead in facilitating cooperation across the logistics chain so that the facilities, security arrangements and border processes are ready for the mammoth and complex task ahead," says Mr de Juniac.
Vaccines must be handled and transported in line with international regulatory requirements, at controlled temperatures and without delay to ensure the quality of the product. While there are still many unknowns (number of doses, temperature sensitivities, manufacturing locations, etc.), it is clear that the scale of activity will be vast, that cold chain facilities will be required and that delivery to every corner of the planet will be needed.
Working effectively with health and customs authorities will, therefore, be essential to ensure timely regulatory approvals, adequate security measures, appropriate handling and customs clearance. This could be a particular challenge given that, as part of Covid-19 prevention measures, many governments have put in place measures that increase processing times, acknowledges IATA.
But the biggest problem could be the current diminished cargo capacity of the global air transport industry. The ongoing severe downturn in passenger traffic has seen airlines downsize networks and put many aircraft into remote long-term storage. "The global route network has been reduced dramatically from the pre-Covid 24,000 city pairs," says IATA, with the WHO, UNICEF and Gavi already reporting severe difficulties in maintaining their planned vaccine programmes during the crisis due, in part, to limited air connectivity.
"The whole world is eagerly awaiting a safe Covid vaccine. It is incumbent on all of us to make sure that all countries have safe, fast and equitable access to the initial doses when they are available," says Henrietta Fore, UNICEF executive director.
The role of airlines and international transport companies will be critical to this endeavour, which will ultimately be the largest single transport challenge we have ever faced, and the most significant if it allows the world to wake from its Covid slumber.