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Clive Update May 28, 2020

May 2020

Niall van de Wouw CLIVE BV Managing Director

In the last few weeks we all have seen numerous pictures passing by, of passenger planes being used for pure cargo flights (=preighters). Their cabins being transformed to a large cargo hold.

Many of these flights were destined for China to pick up the much-needed personal protective equipment. This then led to a surge in capacity.  For example, the capacity on flights leaving China for Europe and the Middle East for the period May 18-24 was around 20% higher than for the period April 20-26.

But as of late, the growth in cargo volumes has stalled (see chart) which has also put the brake on the capacity growth. In line with the cargo volumes, the growth in capacity has been flat for the last three weeks. Loadfactors out of China did remain high at 91%.

This (relative) cooling down of the market is also reflected in the price developments as reported by the recent Air Freight Weekly update by Freight Investor Services. In the week May 18-24 the rates from China to Europe have been slipping from their previous highs.

If this slow down continues, it will be interesting to see if the capacity will be adjusted quickly, or whether we will see a decline in loadfactor first. We will provide you an update on these developments in the next issue of Cargo Pulse.