Despite a sharp fall in demand for air cargo in March, which fell by 15.2%, the sector is still posting better figures than during the Great Financial Crisis when it plunged 23%, according to IATA’s chief economist Brian Pearce.

Pearce was speaking on a weekly audio briefing by the industry association, and he said while the March 2020 air cargo figures showed a “sharp fall” in demand due to the impact of COVID 19  the pandemic had yet to hit the sector as badly as in 2008-09.

“Actually air cargo suffered less in this crisis than it did during the GFC, and it is also suffering less than the passenger sector which saw IATA estimates fell by 30% in March, on top of a 14% fall the previous month.

According to Pearce the two main reasons for the – relatively – strong performance by the cargo sector was demand for medical supplies and continued robust demand across other commodities.  While IATA does not have specific medical supply data, Pearce said that pharmaceutical shipping had doubled.

He warned, however, that recent data was showing a fall in demand for other commodities as the impact of COVID 19 on economic activity was starting to bite the cargo sector.

Despite this tail-off IATA’s latest data show that capacity has fallen by  by 22.7% ahead of a decline in demand of 15.2%, meaning despite the increased use of passenger aircraft to transport cargo there is potential for a market dislocation to occur, according to a statement released by IATA after the call.

“At present, we don’t have enough capacity to meet the remaining demand for air cargo. Volumes fell by over 15% in March compared to the previous year. But capacity plummeted by almost 23%. The gap must be addressed quickly because vital supplies must get to where they are needed most.

With most of the passenger fleet sitting idle, airlines are doing their best to meet demand by adding freighter services, including adapting passenger aircraft to all-cargo activity. But mounting these special operations continues to face bureaucratic hurdles. Governments must cut the red tape needed to approve special flights and ensure safe and efficient facilitation of crew,” said Alexandre de Juniac, IATA’s chief executive in a statement.

IATA said there are still too many examples of delays in getting charter permits issued, a lack of exemptions on COVID-19 testing for air cargo crew, and inadequate ground infrastructure to/from and within airport environments.

While there is an immediate capacity shortage, the collapsing economy is expected to further depress overall cargo volumes.

IATA’s short-term analysis shows that global manufacturing activity continued to contract in March as government-imposed lockdowns caused widespread disruptions. Following the sharp decline in February – which exceeded that of the global financial crisis – the global manufacturing Purchasing Managers’ Index (PMI) rose slightly in March but remained in contractionary territory. This improvement was due to the stabilization of the China PMI; excluding the China outcome, the global index fell to its lowest level since May 2009.

The World Trade Organization’s 2020  forecast gives little indication of a quick recovery. The optimistic scenario is for a 13% fall in trade in 2020, while the pessimistic scenario sees a 32% fall in trade in 2020, IATA says this will deeply impact air cargo’s prospects.

“The capacity crunch will, unfortunately, be a temporary problem. The recession will likely hit air cargo at least as severely as it does the rest of the economy. To keep the supply chain moving to meet what demand might exist, airlines must be financially viable. The need for financial relief for airlines by whatever means possible remains urgent,” said de Juniac.