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Global Air Cargo in the COVID-19 era - Impact on EU's External Trade
29 April 2021Tomasz Brodzicki, Ph.D.
This column is based on Eurostat's COMEXT database, IATA
industry reports as well as data from IHS Markit Maritime & Trade GTA
Forecasting, and other resources offered by IHS Markit.
Eurostat's COMEXT data will be integrated with the IHS Markit
GTA Forecasting database by the end of May 2021 to better split the
global trade volumes between different modes of transport and to
increase the number of modes reported for EU-trade to accommodate
rail and road transport. The new research article based on the
upgraded GTA Forecasting dataset will be published in early
June.
Key findings
2020 proved to be a devastating year for global
aviation, air cargo performed better than passenger transport;
global aviation proved to be very susceptible to the COVID-19
pandemic
Air cargo in 2020 was affected more than global trade
volumes - CTKs fell by 10.6% year-on-year (yoy) with global trade
volume falling by 5.3%
The workload is significantly larger in servicing
extra-EU exports (17.25 million metric tons) than imports (7.31
million metric tons) in 2020
The share of air cargo in servicing extra-EU trade went
down from the average of 2.35% in 2019 to 1.21% in 2020 (in imports
it dropped from 0.28% in 2019 to 0.24% in 2020). The volume and the
share of air cargo in exports were dropping consistently from
January to June 2020 (the lowest point, 0.78% share) and then
rebounded by stated significantly below of 2019 level and did not
reach the levels from Q1 2020
The fall in the volume of extra-EU by air cargo in 2020
(relative to 2019) was the highest in the case of Germany (-4.87
million metric tons, - 44% yoy), France (-2.60 million metric
tons,-50.5%), Italy (-1.85 million metric tons, -57.1%) and the
Netherlands (-1.43 million metric tons, -41.2%)
The share of air cargo in servicing EU'S external trade
differs significantly by destination and product group as well as
trade flow
Introduction
2020 proved to be one of the most difficult years in the history
of aviation and simultaneously one of the worst for the global
economy due to the biggest black-swan in a century, the COVD-19
pandemic.
COVID-19, a simultaneous supply and demand shock affected global
value chains, global trade and passenger flows due to introduced
lockdowns, forced production stoppages, restricted travel as well
overall lower consumer confidence.
The pandemic is not over, however, the unprecedented speed of
development of successful vaccines, progress with mass vaccination
schemes in particular in the advanced nations, can spur some
optimism that within a year or two years, we will be able globally
to control the situation. The crises have proven the vulnerability
of the global economy and that different parts of the world were
affected the different degrees.
Airborne trade plays a significantly more important role in
servicing global trade flows in terms of nominal values than
volumes - mostly due to the structure of products being
transported. In the present article, we will focus on volumes and
the extra-EU trade flows (due to data availability).
IATA - a momentous fall in RPKs & CTKs
According to IATA reports, revenue passenger-kilometers (RPKs)
fell drastically by a staggering 66% year-on-year - eight times
faster than during the 12 months following the 9/11 attacks, which
was considered to be the most severe aviation crisis before 2020.
One of the regions most affected was Europe. In 2020, the
industry-wide passenger load factor (PLF) was on average 17.8
percentage points lower year-on-year and stood at 64.8%.
The expected rebound was adversely impacted by the third wave of
COVID-19 cases, new regional/nationwide lockdowns, and increased
travel restrictions. International air markets have been impacted
to a greater extent than domestic routes since many countries
closed their borders or imposed travel regulations to limit the
virus spread.
Air cargo in 2020 was affected more than global trade volumes
(CTKs fell by 10.6% yoy with global trade volume falling by 5.3%
but significantly less than passenger flows). Air cargo volumes
improved significantly in Q3 and Q4 2020, from the lowest point in
Q2, with global CTKs reported by IATA down only 0.5% year-on-year
in December. Nonetheless, 2020 brought the largest decline in CTKs
from 1990.
While an inventory restocking cycle has started in the latter
part of the year, benefiting air cargo, capacity constraints are
still hampering a fuller recovery.
IATA reports that industry-wide available cargo tonne-kilometers
(ACTKs) down 23.3% year-on-year in 2020, on the other hand, cargo
load factors, yields, and revenues rose to record-high levels,
providing support to airlines and some long-haul passenger services
adversely affected by a collapse in passenger revenues.
International CTKs declined in all the main regions except
Africa (up 1.9% year-on-year) in 2020. It is worth stressing that
Europe is responsible for 23.6% of global CTKs. IATA reports that
CTKs in Europe went down by 16.0% with available cargo
tonne-kilometers (ACTKs) in Europe decreased by -27.1%. Freight
load factor (CLF, % of ACTKs used) went up by 7.9% to 59.7%.
The role of air cargo in extra-EU27 trade
To illustrate the impact of COVID-19 on air cargo flows in
Europe we have utilized the EU Eurostat's extra-EU trade since 2000
by mode of transport, by HS database.
The role of air cargo in servicing extra-EU trade in terms of
volumes is the largest in the case of Germany (6.20 million metric
tons), France (2.55 million metric tons) and the Netherlands (2.05
million metric tons). It exceeded one million metric tons in
Belgium (1.80) and Italy (1.39) and was above 0.50 million metric
tons for Portugal (0.65) and Spain (0.57). In imports, the volumes
were the highest for the Netherlands (2.27 million metric tons),
Germany (1.55 million metric tons), and France (0.67 million metric
tons).
The workload is significantly larger in servicing extra-EU
exports than imports - 17.25 million metric tons in exports and
7.31 million metric tons in imports.
The fall in the volume of extra-EU by air cargo in 2020
(relative to 2019) was the highest in the case of Germany (-4.87
million metric tons, - 44% yoy), France (-2.60 million metric tons,
-50.5%), Italy (-1.85 million metric tons, -57.1%) and the
Netherlands (-1.43 million metric tons, -41.2%). The volume of
exports by air transport increased for Bulgaria only (+36.5%). For
the EU-27 as a whole, it went down yoy by -13.7 million metric tons
(-44.3%).
The fall in imports was limited and was significant only in the
case of the Netherlands (-0.21 million metric tons, -8.5% yoy). For
the EU-27 as a whole, it went down yoy by only -0.43 million metric
tons (-5.5%). The volume of imports by air cargo grew in 2020 yoy
in 19 out of 27 states.
The more granular analysis using monthly-reported data shows
clearly that COVID-19 affected EU exports by air to a more
significant extent than imports.
It could be due to the nature of the crisis - a simultaneous
shock to global supply (production stoppages, lockdowns, extra
safety procedures, disruption to global value chains) and demand
(weaker demand for products & services, lower consumer
confidence).
The share of air cargo in servicing extra-EU trade went down
from the average of 2.35% in 2019 to 1.21% in 2020 (in imports it
dropped from 0.28% in 2019 to 0.24% in 2020). The volume and the
share of air cargo in exports were dropping consistently from
January to June 2020 (the lowest point, 0.78% share) and then
rebounded by stated significantly below of 2019 level and did not
reach the levels from Q1 2020. The lowest point in imports was
reached in August and then rebounded.
Malta is the EU-27 Member State with the highest share of
extra-EU exports volume serviced by air cargo (7.65%), followed by
Germany (3.15%) and France (2.18%) and Portugal (2.13%). To put
everything in the correct context please consider the actual volume
of exports. In 2020 the share went up only in the case of Malta
& Bulgaria.
The share of air cargo in servicing EU-27's exports varies
significantly by destination. The share exceeds 5% in the case of
Anguilla (37.6%), Northern Mariana Islands (14.1%), Bhutan (12.5%),
Afghanistan (8.0%), Tokelau (7.7%) and Macao (6.3%). It is also
high for Cocos (Keeling) Islands (4.6%), Maldives (3.5%), Hong Kong
(3.4%), Botswana (2.9%), Kiribati (2.5%), Zimbabwe, Zambia and Laos
(2.3% each) and South Korea (2.2%).
The share generally increases in distance from Europe, but to a
large extent depends on the geographical features of the
destination and product structure of the trade flow.
The product structure of extra-EU-27 exports and import volumes
in 2020 varies significantly with the highest volume of exports
being the supplies for ships and aircraft and cut flowers and
flower buds in imports. The commodities transported include a
variety of goods from various sectors including fresh plants,
vegetables, and fruits, specialized high-tech or medium-high
technology goods, high-value-added goods and materials.
The highest share of air cargo in imports to EU-27 (exceeding
75%) includes confidential trade of chapter 43 (furskins),
diamonds, cut flowers, and flower buds, chemical elements and
compounds doped for use in electronics, machines for extruding,
drawing, texturing or cutting man-made textile materials &
cinematographic films.
In exports outside of EU-27 in turn the highest shares are
observed in the case of books (confidential trade of chapter 49),
chemical elements and compounds doped for use in electronics,
revolvers and pistols, electron microscopes, proton microscopes and
diffraction apparatus, liquid crystal devices and lasers as well as
optical microscopes, incl. those for photomicrography,
cinephotomicrography, or microprojection.
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