IATA: Supply chain woes halved November air cargo growth

The International Air Transport Association (IATA) released data for global air cargo markets showing slower growth in November 2021. Supply chain disruptions and capacity constraints impacted demand, despite economic conditions remaining favorable for the sector.

As comparisons between 2021 and 2020 monthly results are distorted by the extraordinary impact of COVID-19, unless otherwise noted, all comparisons below are to November 2019 which followed a normal demand pattern.

• Global demand, measured in cargo ton-kilometers (CTKs), was up 3.7% compared to November 2019 (4.2% for international operations). This was significantly lower than the 8.2% growth seen in October 2021 (9.2% for international operations) and in previous months.

• Capacity was 7.6% below November 2019 (-7.9% for international operations). This was relatively unchanged from October. Capacity remains constrained with bottlenecks at key hubs. 

• Economic conditions continue to support air cargo growth, however supply chain disruptions are slowing growth. Several factors should be noted:

1. Labor shortages, partly due to employees being in quarantine, insufficient storage space at some airports and processing backlogs exacerbated by the year end rush created supply chain disruptions. Several key airports, including New York’s JFK, Los Angeles and Amsterdam Schiphol reported congestion.
2. Retail sales in the US and China remain strong. In the US retail sales were 23.5% above November 2019 levels. And in China online sales for Singles’ Day were 60.8% above their 2019 levels.
3. Global goods trade rose 4.6% in October (latest month of data), compared to pre-crisis levels, the best rate of growth since June. Global industrial production was up 2.9% over the same period. 
4. The inventory-to-sales ratio remains low. This is positive for air cargo as manufacturers turn to air cargo to rapidly meet demand.
5. The recent surge in COVID-19 cases in many advanced economies has created strong demand for PPE shipments, which are usually carried by air.
6. The November global Supplier Delivery Time Purchasing Managers Index (PMI) was at 36.4. While values below 50 are normally favorable for air cargo, in current conditions it points to delivery times lengthening because of supply bottlenecks.