Flightradar24 Note: In a global time of need, air cargo has stepped in to get badly needed medical supplies, food, and other essentials where they need to be. With Flightradar24 data, ICF examines how cargo carriers initially responded to the shock of COVID-19 and what they’re doing now.
With more than 50% of global air freight typically transported by passenger aircraft, the massive draw-down in scheduled passenger flights has resulted in significant disruptions to supply chains.
International air freight transport is highly seasonal, with peaks typically occurring in November and early December as retail inventories are built up during the Christmas shopping season in Europe and the Americas. Capacity and traffic decline during the early portion of a new calendar year before ramping up again in advance of the Chinese New Year during which factories in China and several other Asian countries are generally shut down for around two weeks. Following Chinese New Year, international cargo capacity to/from China ramps up again as global inventories are rebuilt.
In 2020, Chinese New Year was celebrated on January 25th and most unfortunately the celebrations overlapped with the shutdown and travel restrictions in order to prevent the further spread of Covid-19 within China. The draw down in international freight capacity to/from China (measured in Freight Ton Kilometers or FTKs) resulting from these two events was slightly larger in size than 2019’s draw down in the rolling seven-day average capacity by year shown below. However, while capacity has typically rebounded after approximately four weeks in the two prior years, in 2020 the reduction in capacity persisted for closer to six weeks and did not fully recover until early March. International cargo capacity in 2020 surged post-Chinese New Year as cargo flights ramped up to replace some of the belly capacity lost as airlines grounded their fleets around the world and the virus spread to Asia and the Americas requiring shipments of medical supplies and materials produced in China.
On a regional basis, pure freighter capacity to/from China has increased 25% or more across most regions, with three notable exceptions: two extremely large spikes occurring in February in the Domestic China market and China to/from Central Asia, and one reduction in capacity to the west, including Europe, Middle East and Africa (EMEA), which was down 15% for most of March.
The domestic China increase of over 600% in February 2020 compared to February 2019 was driven two factors; firstly the different date for New Year, which also created the earlier dip in FTKs at the end of January, and secondly the significant increase in flying by at least two of the major China-based cargo airlines – Air China Cargo and SF Express. Focusing on Wuhan as an example, in 1Q 2019, there were no domestic freighter flights into Wuhan recorded in ADS-B data while in 1Q 2020 there were over 260 flights in a little over two months.
Operations by Air China Cargo and SF Express show a significant increase in flight operations in February and March 2020. Air China Cargo largely operates a widebody aircraft fleet, so the sharp increase in flights per month and significantly lower increase in Total FTKs per month largely indicates a significant shift away from longer haul international capacity to shorter haul regional and domestic operations. SF Airlines saw significant spikes in flights and FTKs as well, but as a primarily narrowbody operator, reflects more of an across the board increase in operations.
Looking at the impact of capacity changes on intercontinental traffic flows, air freight rates from China to Europe spiked to more than $7 per kilogram from less than half that in February, according to air freight analysis firm TAC Index, likely resulting from the decrease in passenger capacity, and a decrease in cargo capacity by nearly 15% through March 2020. The increase in freight rates, coupled with the humanitarian crisis requiring a continued flow of medical equipment shipments, has brought about some surreal sights. Passenger aircraft are being deployed for their freight capacity, not just in the belly compartments, but on flights by Virgin, Lufthansa and LATAM, with cargo strapped to economy class seats and secured with bulk freight netting.
In the Asia – North America sector, cargo capacity is up nearly 25% year-over-year in March, but additional capacity has been creatively supplied with major US airlines offering charter cargo flights using passenger aircraft and on the more high-profile side, the New England Patriots, an American football team based in Boston, using their team’s aircraft to rush medical supplies from China to supply Boston and New York City hospitals. FedEx, a major transpacific operator that was in the process of removing several older aircraft including large capacity MD-11Fs from its fleet, has decided to reactivate several aircraft in order to further expand its capability and Air Canada has begun removing economy seats from several widebody passenger aircraft in order to accommodate more main deck cargo capacity.
Moving forward, until there is a resumption in international passenger traffic demand, freighter aircraft are expected to continue to operate at above their historic normal utilization rates—with implications for both their values and their future maintenance requirements. Aircraft that are in the process of being removed from passenger aircraft fleets, such as older 737-800s, A321s, 767-300ERs and A330s, will be looked at for cargo conversion opportunities to add to the world freighter fleet as feedstock for the conversion programs has largely been constrained in recent years due to strong passenger traffic growth.
If you’d like to discuss this analysis or further analysis of specific areas, please contact us at Kara.Levine@icf.com and Alastair.Blanshard@icf.com
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