Airlines are nervous about shippers looking to move their traffic to slower, less costly modes. Since the downturn of 2009, airfreight growth has been markedly slower than before, fueling worries that shippers are increasingly shifting their intercontinental flows to slower, less costly alternatives, notably ocean vessels.

The high cost of airfreight has caused many shippers to scrutinize the need for sending goods by air. This has been reinforced by the array of surcharges levied on airfreight shipments, from fuel and security screening to war risk levies, remarks Elio Levy, executive vice president of forwarder Logfret. He adds that one client of Logfret’s is pursuing a policy of using ocean freight wherever possible. To send a shipment by air, managers have to obtain a signed quote to request formal authorization to do so.

According to logistics research and consulting firm Seabury Group, the modal shift actually began as early as 15 years ago, well before the global economic slowdown triggered by the sub-prime crisis. By Seabury’s calculations, this shaved almost 2 percent off the annual growth of airfreight and shifted about 5.4 million metric tons to ocean carriers.

Dirk Steiger, managing director of air cargo research and consulting firm AAA Advisory, points out that the modal migration is not across the board. Some commodities need airfreight, especially medical products and perishables. “These volumes have kept growing,” he observes.

Steiger reckons that mode shift has largely run its course. Most cargo that could be shifted to slower modes has by now completed the migration, he says.

Items like flat-screen TVs, which used to be carried on freighter aircraft, have switched completely to ocean transportation as their retail price slumped to less than 10 percent of their former value. On the other hand, the automotive industry, which orchestrated a large shift to ocean carriers, has shown a marked uptick in the use of airfreight over the past 18 months, partly in response to the establishment of a slew of new production plants in North America, especially in Mexico.

Disruptions like the problems at West Coast ports earlier in the year also cause massive shifts to airfreight, as shippers and importers struggle to keep their deadlines. This is not likely to have a lasting effect. Whatever can return to ocean will do so, remarks Giorgio Laccona, COO of Walker International Transportation. Still, companies with international supply chains have to examine access to ports, especially after the expansion of the Panama Canal is completed, he adds.

For airlines, the mode shift has been exacerbated by the parallel trend of products diminishing in size. Auto parts and large flat-screen TVs generated vastly more revenues for them than iPhones or iPads, which weigh and measure tiny fractions of the typical airfreight commodities of yesteryear.

“An Apple Watch weighs less than 100 grams, an iPhone 300 grams. With their high value per kilo, these can easily absorb the higher cost of airfreight and will continue to move by air,” remarks Steiger.

For many goods, the transit times of ocean carriage simply do not work, says Levy. Some of Logfret’s customers from the fashion sector frequently bring in new styles; waiting for a vessel to arrive is not an option, he remarks. Moreover, many fashion chains have very limited storage space, he observes.

Hawaii-based Cyanotech, a producer of health products made from microalgae, ships its products by airfreight to get them to the customers as fresh as possible. If clients prefer to have them shipped by ocean carrier, it recommends the use of temperature-controlled containers to maintain freshness and protect the goods from sunlight and seawater.

Whether or not a company uses airfreight as a strategic option depends on its business model. When it comes to ad hoc air cargo shipments to deal with production problems or other supply chain disruptions, even firms that have formally banished the use of airfreight do not think twice about putting the cargo on an aircraft, says Steiger.

Albert Saphir, principal of logistics consulting firm ABS Consulting, points out that shipping by air is not always more expensive than the ocean freight alternative.

“Certainly there are origin/destination pairs/lanes that offer unique back haul opportunities,” he remarks. “For example a 500 kg shipment from Miami to Bogota is likely to be less expensive via airfreight than ocean LCL. So there are more moves by air than ocean on that lane due to the total costing. The same may apply for a shipment from Dallas to Budapest, here mostly for the expensive inland freight add-on’s on both sides of the ocean.”

Shawn McWhorter, president of the Americas for Japanese freighter operator Nippon Cargo Airlines, sees less of a trend to shift cargo from air to ocean than to slower alternatives within airfreight. Wherever possible, many shippers embrace economy services with extended transit times in lieu of premium offerings. “There is a shift from international express to deferred service,” he says.

“There has definitely been a shift to deferred service,” confirms Levy. “We are always asked if we have a cheaper option. Customers are usually ready to wait a couple of days.”

In many cases this translates into mid-week or weekend consolidations. Less urgent shipments that have piled up at the forwarder’s premises are bundled after a couple of days. All large forwarders leverage their volume with airlines by concentrating deferred traffic flow through designated gateway airports, where they have negotiated special rate agreements with their preferred airline partners, whereas urgent shipments are flown from the nearest airport with a link to the destination in question.

In some cases a mixed modal move may offer the best combination of rate and transit time. Out of Asia, especially China, rail service to Europe has gained traction with prices and transit times in-between the offerings from air and ocean carriers. The addition of an airfreight segment can make this viable for service to the Americas. One forwarder is moving cargo by rail from central China to Germany, deconsolidates the shipments after landing and trucks them to its European gateway for airfreight, from where they are flown to Brazil.

“We have one customer who ships to L.A. and then trucks to the East Coast. It takes 10 days on the water and a week on the road, which is a bit faster than all-water service,” says Levy.