Ukraine war, China’s zero-COVID policy lead to fall in air cargo demand: IATA

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The Russia-Ukraine war and China’s COVID-zero policy have led to a fall in cargo demand, the International Air Transport Association (IATA) said in a statement on Thursday.

IATA released its April 2022 data for global air cargo markets, showing a drop in demand and a contraction in capacity brought on by the spread of the omicron variant in Asia and the war in Ukraine, which continue to create “a challenging operating backdrop that is driving decline.”

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Global demand fell by 11 percent compared to April last year, accounting for a 10 percent decline in international operations. The association also found that capacity was 2 percent below 2021 levels, with Asia experiencing the largest falls in capacity.

“The war in Ukraine led to a fall in cargo capacity used to serve Europe as several airlines based in Russia and Ukraine were key cargo players,” according to the IATA statement. “The zero-COVID policy in China led to capacity challenges due to flight cancelations because of labor shortages.”

The statement also revealed that Middle Eastern carriers experienced an 11.9 percent year-on-year decrease in cargo volumes in April. Significant benefits from air traffic being redirected to avoid flying over Russia “failed to materialize,” IATA said, attributing this to persisting supply chain issues in Asia.

New export orders, a leading indicator of cargo demand and world trade, are now falling in all markets except the United States.

Global goods trade has also continued to decline in 2022, with China’s economy growing at a much slower rate due to COVID-related lockdowns, among other factors. The COVID-19 lockdowns brought much of Shanghai, the world’s largest port, to a standstill.

This, coupled with supply chain disruptions from the Ukraine-Russia war, have also added to the downward pressure on trade.

“The combination of the war in Ukraine and COVID-19 lockdowns in China have pushed up energy costs, intensified supply chain disruptions, and fed inflation,” said IATA Director-General Willie Walsh.

“The operating environment is challenging for all businesses, including air cargo. But with China easing lockdown restrictions, there is cause for some optimism and the supply/demand imbalance is keeping yields high,” Walsh added.

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