Dive Brief:

• The war in Ukraine and lockdowns in China stunted air cargo volumes and capacity in March, interrupting a recent industry recovery from pandemic-related disruptions, according to a press release from Clive Data Services.
• Air cargo volumes fell 4.5% from March 2021, while capacity dropped 4%, per data from Clive, which was recently acquired by Xeneta. Rates, meanwhile, remain elevated and were 27% higher than the year before.
• "In overall air cargo market terms, March was a step back from the trend we saw late last year and earlier this year," said Niall van de Wouw, chief airfreight officer at Xeneta, in a statement. "We have been reminded of how the limited control the general airfreight market has over its own destiny and how it is impacted by passenger traffic trends, disruption in the oceanfreight market, and geopolitical events."

Dive Insight:

Russia's invasion of Ukraine and China's lockdown of Shanghai have strongly influenced conditions in an air cargo market that has yet to return to pre-pandemic capacity levels.

The war in Ukraine has forced affected carriers either to take lengthier routes in a period of high fuel costs or cancel flights. "The international sanctions against Russian carriers, the closure of Russian airspace and the associated daily changes in circumstances are increasing the volatility of the market," DB Schenker said in an April 7 update.

Capacity between Europe and Northeast Asia specifically saw a 20% decline following the closure of airspace in Russia, according to Clive. And from March 21-27, Japan-to-Europe spot rates jumped nearly 50% higher from the weeks preceding the war.

Meanwhile, in Shanghai, China, lockdowns and staffing difficulties at ports have slowed port operations, reduced product availability and stymied truckers, according to an April 5 email update from Freightos.

"With limited goods available to ship, air cargo demand out of Shanghai is decreasing quickly," per Freightos' update. "In response, air carriers are canceling flights."

The drop in capacity sparked an increase in rates, with Shanghai-Northern Europe rates jumping 43% the last week of March from the period before the recent COVID-19 outbreaks, according to the Freightos Air Index.

Carrier operations at Shanghai Pudong International Airport in particular have been challenged by the restrictions. A suspension of inbound dangerous goods cargo at the Shanghai Pudong International Airport Cargo Terminal announced April 2 will be in effect for two weeks, according to Crane Worldwide Logistics.

"Cargo handling at PVG airport continues to be almost impossible," per an April 8 update on Crane's website. "Cargo cannot be delivered into or picked up from the PVG airport area. More airlines have announced flight cancellations."

Cargolux and Etihad Cargo announced flight cancellations to and from the airport, according to Crane. For Cargolux, flights are canceled April 8-14. For Etihad, freighter flights are canceled April 13-20.

Cargo is now shifting to other airports, with Zhengzhou, Qingdao, Tianjin and Beijing seeing higher volumes and reduced capacity, Crane added.

The disruption in Shanghai "is not unexpected," but it adds to current air cargo staffing challenges due to COVID-19, van de Wouw said.

"In the first two months of 2022, we were talking of growing resilience in the airfreight market and a recovery to pre-Covid levels," van de Wouw said. "March data shows how quickly this can change."