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  • Sustained long-term momentum in the use of air transport in Asia, thanks to the emergence of the middle classes
  • Technological advances contribute to cost reduction


  • Sector heavily impacted by the Covid-19 crisis
  • Sector highly dependent on oil price fluctuations
  • Sector hard hit by environmental concerns

Risk Analysis

Risk Assessment

Overall, the transport sector (air, road, sea and rail) has been very strongly penalized by the Covid-19 pandemic, and is not expected to return to its pre-crisis level before 2022, according to Coface. However, in the longer term, the sector should continue to benefit from mobility needs, the emergence of the Indian and Chinese middle classes and the reduction of costs thanks to technical progress, especially in the air and maritime segments.

World trade is declining because of the pandemic: the World Trade Monitor (which measures global merchandise trade) fell by around 16.2% year-on-year (YoY) in April 2020 (its lowest point) , and was 8% lower in the January-July 2020 period compared to the same period in 2019. Airfreight (measured in tonne-kilometres) dropped by 14% YoY over the January-August 2020 period. Global sea freight has also been impacted: the container throughput index (a measure of the volume of maritime container transport, which accounts for 52% of global sea freight in value) decreased by just over 8% YoY in May 2020.

Air passenger traffic has practically stopped because of the measures taken to combat the spread of the coronavirus (lockdowns, border closures). The daily number of commercial flights decreased by 75% between 16 January  and 12 April of 2020 (the lowest point).


Transport Flights EN


The indefinite grounding of the Boeing 737 MAX aircraft, following crashes in October 2018 and March 2019, is penalizing Boeing's financial health, as well as the financial health of the many airlines (particularly U.S. airlines) that use these planes and that are mechanically experiencing a (temporary) reduction in the size of their fleets. Moreover, Airbus and Boeing have been forced to reduce their respective production due to Covid-19, which affects the entire production chain.

Environmental concerns and measures implemented to combat the emission of greenhouse gases or pollutants could penalize the sector.

Sector Economic Insights


The transport sector is at the heart of the Covid-19 crisis

The Covid-19 pandemic and the measures taken to contain it have had a very significant effect on global economic activity (which was already decelerating in 2019): Coface forecasts a global growth rate of -4.8% in 2020, after 2.6% in 2019 and 3.2% in 2018. This decrease in economic activity will have an even greater impact on world trade, which was already slowing down before the crisis due to the economic slowdown, affecting the income of companies in the sector. According to the Netherlands Bureau for Economic Policy Analysis (CPB), world trade declined by 16% YoY in April (its lowest point) and by 8% YoY over the period January- August 2020. Both sea and air freight are mechanically impacted by the decline in trade. Thus, the maritime transport of goods (which represents 80% of global freight) is declining: the average value of the container throughput index decreased by 4.4% YoY between January and August of 2020, compared to +2.8% the previous year. Airfreight (measured in tonne-kilometres) decreased by 13% YoY in August.

Transport Containers EN


Passenger air transport has been very strongly impacted by the health crisis: in August 2020, international traffic (measured in Passenger Revenue Kilometres (RPK)) decreased by 75% YoY according to IATA, which estimates that airline revenues should decrease by 50% in 2020.

The global aviation market, already impacted by Boeing's setbacks following the crashes of two Boeing 737 MAX aircrafts in October 2018 and March 2019, is also suffering from Covid-19, as Airbus and Boeing, the two largest aircraft manufacturers, were forced to sharply reduce their production, impacting their aircraft equipment suppliers. Furthermore, airlines using the 737 MAX already suffered from its grounding in 2019: for instance, Southwest Airlines, the company with the world's largest fleet of this aircraft, estimated the loss of operating revenue due to the grounding of the 737 MAX at USD 828 million in 2019.

The effect on rail freight is more complicated to estimate: in some economies, rail freight declined because of Covid-19, as it is complementary to air and sea freight in these countries, to the extent that rail freight is used (alongside road freight) to move goods to and from airports and ports. For example, Union Pacific, one of the largest U.S. rail carriers, recorded a 22% YoY decline in volumes transported between 1 April and 2 June.

In other regions, where rail can partially substitute for sea and air freight, the volumes transported could have increased during the Covid-19 crisis. For instance, in Russia, rail freight between China and Europe increased by 35% YoY between January and May.


A difficult recovery for the transport sector

At the global level, the transport sector is not expected to return to pre-crisis levels before 2022. In Coface's central scenario, the turnover of listed companies in the transport sector would be 5% lower in Q4 2021 compared to Q4 2019, and 27% lower in the risk scenario (if a severe second wave of the pandemic materializes at the global level in Q3 2020). The airline market should be the most impacted: the turnover of its listed companies is expected to decline by 51% in the central scenario and by 57% in the risk scenario in 2020. According to IATA, this market will record a loss of USD 84 billion in 2020. However, airfreight should take advantage of the situation: as capacity has fallen much more than demand (-29.4% YoY in June against -12.6% for demand), the load factor and the freight rate have increased, leading to a positive net effect: +8% revenue in 2020 according to IATA.
In Europe, air transport, particularly the low-cost segment, is facing a strong overcapacity problem, reducing companies' margins and making them more sensitive to the economic environment and oil price variations. A significant number of airlines went bankrupt last year (WOW air, XL Airways, to name but a few), undermined by the sharp fluctuations in oil prices and the economic slowdown. The Covid-19 crisis could accelerate this trend in the short-term. However, these insolvencies could reduce overcapacity in this market in the long-term, consolidating it and enabling companies to increase their margins.


Environmental concerns are disrupting the sector

In order to fight pollution and address environmental concerns, several measures have been implemented to reduce the impact of the transport sector on health and on the environment. For instance, IATA set itself the objective to halve its CO2 emissions by 2050 (compared to their 2005 level), the European Parliament voted in early 2019 to reduce CO2 emissions from heavy goods vehicles by 25% by 2025 and 30% by 2030, and the International Maritime Organization (IMO) has set a new limit on sulphur oxide emissions from ships. The latter measure, known as IMO 2020, took effect on 1 January 2020 and limits sulphur emissions to 0.5% (or 5kg per tonne of fuel) compared to 3.5% previously.
Ships have several options for complying with IMO 2020. First, they can use low sulphur fuel oil (LSFO) or marine gas oil (MGO), which will be more expensive than the previously used high sulphur fuel oil (HSFO) due to higher production costs. They also have the option of continuing to use HSFO, if they install purifiers that enable them to emit no more than 0.5% sulphur oxide, but the installation is long and expensive. Estimates of the number of ships with purifiers as of 1 January vary between 2,000 and 4,000 ships, while the United Nations Conference on Trade and Development (UNCTAD) estimates the global fleet at over 95,000. Finally, it is possible to use liquefied natural gas (LNG), even though this option seems unlikely in the short-term, as not all ports can supply ships with LNG. Therefore, the most likely option for ships in the short-term is the use of LSFO or MGO. In any case, IMO 2020 will penalise shipping companies through the increased costs it induces. The negative effects of IMO 2020 will be all the more significant as the measure comes into force in a context of economic slowdown and deterioration in world trade.
The environmental concerns of consumers are leading some of them to stop flying and look for alternatives to air transport. This movement, known as “flygskam” (literally "the shame of flying") is spreading throughout Europe and the United States, and could have a lasting impact on air passenger transport.


Last update : October 2020

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