Aviation Industry Experiencing Cargo Crunch

2020 is likely to go down as the worst financial year in aviation history, but one segment of the industry is actually on the rise: cargo.

Even as passenger revenues fall as a result of the COVID-19 pandemic, the need for e-commerce and transporting other essentials continues to rise globally.

Demand for cargo aircraft has “skyrocketed because of the [higher] demand for personal protective equipment, medical supplies and pharmaceuticals,” explained Brandon Freid, executive director of the Airforwarders Association, a trade group for the freight forwarding industry.

In a report released by the International Air Transportation Association (IATA) in June, global air transport revenues are expected to drop to $419 billion – a nearly 50 percent decrease from 2019.

Most of that decline comes from passenger revenues, which are expected to fall to $241 billion this year, down from $612 billion in 2019.

By contrast, cargo is projected to make up 26 percent of total airline revenue this year – up from 12 percent last year. Revenues are expected to reach a near-record $110.8 billion.

But there’s a catch: Because airlines are operating fewer flights, air freight is experiencing a dramatic shortage of capacity. There simply aren’t enough cargo holds on passenger flights to meet the demand.

Cargo-only flights

To respond to the growing need for cargo transport and to generate other sources of revenue, American, United and other carriers have started operating cargo-only flights for the first time in years.

In March, United quickly formulated a “plan of action” to convert and successfully operate cargo-only flights from its hubs to international destinations – mainly on its fleet of Boeing 777s and 787 Dreamliners.

Likewise, American Airlines has expanded its cargo-only service to Europe, Asia and Latin America. In the second quarter of this year, American transported up to 100 million pounds of cargo throughout its network – ranging from mail to goods and supplies.

In September, American plans to offer more than 1,000 cargo flights to 32 destinations – nearly doubling its August schedule.

United continues to add cargo-only flights to cities that it served with passengers prior to the pandemic. For its second quarter report, United posted a 36.3 percent increase in cargo revenue – helping the company offset losses incurred from the drop in passenger traffic.

“Air cargo continues to be more important than ever,” United Cargo President Jan Krems said in a statement. “This network expansion helps our customers continue to facilitate trade and contribute to global economic development and recovery.”

A ‘Capacity Crunch’

With fewer passenger flights available for cargo, the laws of supply and demand have taken hold.  The shortage of cargo space is expected to cause shipping rates to rise by nearly 30 percent and increase the profit margins of air freight, according to IATA.

“Half of air cargo flies in the belly of passenger planes – I would say only 20 percent of those planes are actually flying right now,” Freid said.  “Couple