03/10/2022
How to develop new Air Freight capabilities through a crisis ?
With up and downs due to crisis, discover why it is urgent now for operators to secure capacity for their clients.
Air Freight logistics still in a good shape after crisis
The global COVID-19 pandemic has brought unparalleled challenges to the logistics sector, interrupting supply chains across the world. But things are changing. In Q2 of 2021, global Air Freight shipping volumes were above their pre-crisis level, and freight rates stayed high – especially on routes between Europe and Asia.
In other words, the Air Freight services environment is currently favourable, and the Air Freight Logistics sector is demonstrating steady and consecutive growth.
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?
Capacity. Capacity. Capacity : why is it so strategical for customers
Of course, capacity issues aren’t just affecting the shipping industry. Air Freight capacity is also under strain – a situation that will continue in the months to come. This has played a major role in the way Air Freight forwarders, companies and airlines have adapted strategically to survive. Many airlines, for instance, increased cargo capacity in their planes and some started filling empty passenger aircraft with cargo.
One international Air Freight company – Cathay Pacific Cargo – recently announced their plans to modify two aircraft for the upcoming peak season. While these approaches can provide strategic advantages, they also come with cost increases and extra complexity. It remains to be seen whether they become less strategically advantageous as passenger traffic resumes. Whatever the strategies employed, the sector will see capacity issues in the years to come. And these issues will definitely affect Air Freight rates – especially as we enter the peak period before the end-of-year festive season.
A freighter aircraft can make all the difference in urgent situation
Clearly, current Air Freight capacity shortages have added new logistical constraints to customers’ supply chains. However, the best logistics companies are always proactive when it comes to supplying air cargo space for their international clients. One solution is to charter an its owned aircraft to provide best-in -class services. This helps, on the top of them :
- Ensure capacity for customer demand, and dedicate full capacity flights for customers when required
- Provide reliable flight schedules for customers
Booking on this type of freighter brings a variety of advantages to international companies whose shipment volumes and requirements change across time. These advantages include:
- Reliable extra capacity (for instance, the A330-300 operated by GEODIS can contain up to 26 standard containers)
- The agility to book large or small space volumes
- Schedule and trade lane flexibility
- Up-to-date visibility on route and transportation status, with digital tools provided with the service
- Careful main deck loading, dangerous goods handling, insurance for temperature-controlled shipments and other specific insurances (particularly for healthcare/life sciences industries).
That’s what GEODIS did with its Airbus 330-300, transforming a passenger aircraft into a cargo plane to better serve its clients.
"The current space shortage – a consequence of the pandemic – has added new logistical constraints to the supply chains of our customers. Operating our GEODIS freighter on key lanes will provide our clients with reliable, scheduled extra capacity under our control, helping them overcome those constraints"
Eric Martin-Neuville, Executive Vice President Freight Forwarding
Often, Air Freighter companies opting for this kind of solution ask partners to operate their full freighter aircraft. They use strong relationships with partner carriers across a global network to provide best-in class Air Freight cargo services. And they use proven carrier programs to engage and enhance their service offering to respond to customer needs.
In a sector characterised by volatile and dynamic shifts, it’s hard enough for companies to overcome pandemic constraints without worrying about capacity shortages. Now, more than ever, it’s up freight forwarders to offer innovative solutions such as fully owned cargo aircraft that help international Air Freight customers get their goods to where they need to go.
Want to find out how to secure Air Freight capacity for your goods?