Why does Air Freight market keep changing?
Of course, Air Freight is also undergoing a cycle of dynamic demand, driven by a recovery phase as the economy starts to bounce back from the first wave of the pandemic. And this in turn is driving a need for rapid restocking – a set of activities that is a particularly important factor for Air Freight. As an example, April 2021 was the fifth month in a row in which cargo volume growth exceeded world trade figures.
Even the slight slowdown in manufacturing production in emerging markets seems to be balanced by growth in Europe and North America, partly driven by a switch from goods to services as the hospitality industry restrictions start to lift.
This dynamism is also driven by economic competitiveness between air transport and shipping. As any company who has asked for an Air Freight quote knows, Air Freight was 12 times more expensive than Ocean Freight before Covid-19 (according to the IATA (International Air Transport Association). Now that ratio is six. This turn of events is even more surprising when you consider that Air Freight rates and the associated surcharges went up sharply by more than 90% during this same period. The explanation for Air Freight competitiveness is, of course, that Ocean Freight rates have also risen dramatically, as explained in another of our articles. This has been accompanied by an increase in congestion across the entire container supply chain, leading to a large reduction in service quality as transit time gets longer and access to capacity goes down.
You’re head of logistics in your company, and need to adapt to this changing air freight market?