The relaxation of Covid-19-related restrictions in most of the world was positive for the reopening of trade, but the recovery was not always easy for airlines, airports and aircraft manufacturers.China continued to maintain a series of blockades that restricted air traffic. Meanwhile, the biggest shock to the system was Russia’s invasion of Ukraine, which sent fuel prices up and helped send the air cargo market down steadily for the rest of the year. These aspects are part of FreightWaves summary of this exciting market.
The good
Mergers and acquisitions: Air cargo traffic plummeted in 2022, but that should have been expected after a historic 2021 heavily influenced by unprecedented supply chain distortions. Experts are optimistic about the long-term outlook for air cargo, with a projected compound annual growth of 4%. Express carriers can expect even better demand, fueled by the continued shift in online shopping. Being the purchase of Atlas Air, a major provider of air cargo transportation and leased cargo aircraft, by an investment group led by Apollo Global Management for US$5.2 billion. The acquisition was the largest in the cargo airline sector in 2022.
New Market Entrants: The number of passenger airlines and non-traditional carriers starting cargo fleets increased for the second year in a row following a surge in demand for air cargo during the pandemic. The airlines realized that cargo was more lucrative than previously thought and that diversifying revenue was a good goal. Meanwhile, shipping lines with growing logistics ambitions and e-commerce companies have launched cargo airlines to control capacity and provide a more reliable delivery service.
MSC started offering air cargo services in December. CMA CGM expanded its services, but subsequently stopped it “temporarily”. Maersk is investing heavily in its cargo airline with new aircraft and flights on the Asia-US route.
New orders and conversion boom; Boeing and Airbus saw a big jump in orders for new cargo planes during 2021 and 2022. There have been about 115 total freighter orders to date, including Boeing 767 and 777 jets, up from 95 last year. The real increase in freighter production involves the aftermarket sector, where used airliners are converted to carry heavy-duty containers on the main deck.
The bad
Invasion of Ukraine: Russia’s invasion of Ukraine was a major setback for the air cargo industry just as the world was beginning to recover from the pandemic. Western nations blocked access to Russian airlines and banned aviation technology exchanges. Russia retaliated by closing its airspace to many airlines. Some 400 planes worth $10 billion remain stuck in the country after airlines refused to return them to Western charter companies.
Disappointing market: A positive start to the year for air cargo operators began to turn sour after the invasion of Ukraine, with rates falling steadily since April as the war, high energy prices, inflation, high inventories of retailers and renewed consumer focus on services undermined demand for goods. Widespread lockdowns at major Chinese manufacturing hubs reduced factory output and depressed exports carried by air and sea freight. In March, capacity fell 20%, load factors hit 84%, and short-term rates increased 1% in one week. Freight volumes towards the end of December, by some accounts, were almost 20% below the 2021 level.
Supply Chain Delays: Boeing, Airbus and conversion houses such as EFW, 321 Precision Conversions, Aeronautical Engineers and their suppliers have experienced production delays due to supply chain challenges. Aerospace companies are having trouble filling assembly lines, especially after many older workers retired during Covid-19 and new hires require extensive training, which takes time.
Drones: Large drones for half-mile transportation have made leaps and bounds to become commercially viable. Sabrewing Aircraft successfully conducted a test flight with its RH-1-A Rhaegal vertical takeoff cargo drone with a payload of 825 pounds. Dronamics, meanwhile, became the first cargo drone company to obtain an operating license in the European Union. Finally, after years of anticipation, Amazon began limited drone delivery in Texas and California.
By MundoMaritimo