Experts offer tips and advice for riding out the turbulent airfreight market.
Capacity remains tight, driving rates higher and extending the current fragility in many supply chains. Airports that have implemented zero-COVID strategies—which make sense from a public health perspective—may also be just one infected individual away from having to shut down.
Despite tighter capacity and rising rates, “air cargo has become an even more critical part of the supply chain,” says Bryan Schreiber, manager, air cargo, business development for the Columbus Regional Airport Authority, which owns and operates the cargo-focused Rickenbacker International Airport.
Rather than using air freight primarily to handle short-term peaks, companies are relying on it to move products to stores and production lines.
For instance, during the pandemic, logistics firm DB Schenker has been running about 57 flights per week. That’s up from about 15 full charters pre-pandemic, says Benno Forster, senior vice president, head of operations and procurement, airfreight Americas.
Rising Demand, Less Capacity
During August 2021, cargo ton kilometers had increased 7.7% over August 2019, or before the pandemic. Capacity, however, had dropped 12.2%, when compared to the same period, says Perry Flint, spokesperson, International Air Transport Association (IATA).
One reason capacity remains constrained is the large number of international passenger flights still grounded. Normally, passenger planes haul about half of all cargo. For most routes, it doesn’t make economic sense to fly planes with cargo only and few passengers.
“As odd as it may sound, the lack of intercontinental passenger flights is causing the strain in the intercontinental air cargo market,” van de Wouw says.
The jump in ocean freight costs also is prompting some shippers to move to air. “The delta between ocean and air costs is not that significant, considering how much faster air can be,” says Brandon Fried, executive director, The Airforwarders Association.
And while increased airport congestion may add a few days to a shipping schedule, seaport congestion currently can add weeks.
For retailers concerned about receiving their shipments before the upcoming holiday season, the extra cost of air shipments often is worth it. “Shippers are willing to pay higher rates to receive their inventory in time,” says Cathy Morrow Roberson, president of Logistics Trends and Insights.