Capacity Issues Allow Modest Rise in Rentals

The demand for airfreight continues to be strong. IATA data, which now compares February 2021 with pre-Covid February 2019, shows that the total demand for airfreight has increased by some nine percent expressed as Cargo Tonne Kilometers. However, this needs to be seen in the context of the timing of the Chinese New Year such that the actual comparative increase perhaps approximates six percent. The rate of growth may have slowed but this is still a significant increase and demonstrates why there is such demand for freighters. The demand for dedicated freighters is largely a function of the grounding of passenger aircraft which reduces the amount of belly hold capacity. Despite the use of preighters and the return to service of parked freighters, overall airfreight capacity was 15 percent lower than February 2019. The combination of increased freight and capacity reduction has seen load factors increase and with it airfreight rates. Pre-Covid load factors were less than 50 percent but February 2021 is seeing rates some 12 percent higher at nearly 60 percent. Load factors for airfreight are usually much lower than passenger aircraft because of the bi-directionality of cargo. A flight can see maximum payload flying in one direction but then a much light load on the return due to the nature of the product being shipped. The North American market showed very strong growth amounting to over 17 percent compared to February 2019 reflecting the rise of internet shopping. The short term blockage of the Suez Canal may see a slight change to demand. There are a number of other freighter types not listed below including the CRJ200F, DC9-30F, MD82SF/MD83F.