Surge, urge and demand- the name of the air cargo game this year. The supply chain industry has been anything but predictable over the past few years, and with never-before-seen port congestions and consumer demand across the globe, 2022’s peak season is shaping up to be anything but normal.
For air cargo shippers to best prepare for the surge in demand, it’s crucial to start considering solutions as soon as possible. As shippers and the overall air cargo industry ready for an undoubtedly busy peak, the challenges and headwinds ahead are not to be taken lightly.
According to the Council of Supply Chain Management Professionals‘ 33rd annual “State of Logistics Report,” air cargo volumes rose by 18.7% and revenues surpassed $175 billion-record numbers that also represented a 36% increase from 2020. The report details expected numbers for 2022 to pull in around $169 billion-a slight decline from 2021, but still nearly 30% higher than 2020.
Data from recent International Air Transport Association research details that airfreight will account for 24.4% of total passenger and cargo airline sales, driving further capacity constraints for shippers looking to move cargo via air.
The data doesn’t decimate the underlying tone that peak will need planning. This year’s busy season is no different than the last and if shippers have learned one thing, it’s that air cargo is crucial to circumvent congestion and effectively navigate almost any delay. Preparing for a hectic stretch from August to December should be expected-and air carriers must be ready for shippers to look to them as a solution to expedite freight around the congested ports. To help mitigate and manage expectations, here are six differentiating tips to help best prepare for this year’s peak season.
PLAN IN ADVANCE
During peak, shippers should assume longer lead time and increased time in transit. It’s important to plan accordingly and be transparent, get in touch with your logistics provider far ahead of time to prevent unexpected roadblocks and coordinate freight shipments well in advance to ensure on-time delivery. Book well before the Cargo Ready Date and have a backup plan in mind.
FACTOR IN DELAY
The supply chain should be viewed as a living, breathing beast. One day it’s content and happy and the next it’s filled with angst and nothing seems to be going smoothly. When preparing for peak, factoring in disruption and potential delay will set your operation up for success. One way to best determine the length of a delay is to consider the “bullwhip effect.” When inflated demand starts in one area of the supply chain, it can create a ripple where the inflation increases at a greater rate in another area of the supply chain. As soon as a delay or increase in demand is identified, it must be communicated to all areas of the supply chain to appropriately and quickly address the problem in all areas.
Shippers must be overly transparent with their customer base and proactively manage and mitigate needs and issues. This can include ensuring collaborative communication with your 3PL partner to prioritize shipments to ensure that if disruption or supply chain congestion rears its head, there’s a preemptively agreed-upon game plan. For instance, assign ownership ahead of time for a disruption management team to ultimately offer problem-solving through one voice that’s qualified and prepared to address supply chain challenges.
Being transparent with your 3PL keeps them informed and in control of timely decisions while empowering them to proactively identify and execute solutions when the inevitable kink in the supply
TECHNOLOGY IS YOUR FRIEND
With the holiday peak, you need every advantage you can get, and technology offers supply chain visibility that humans cannot see otherwise. Allow the advancements of technology to help you: Your transportation management system(s) (TMS) and telematics systems are your friends. The capabilities of your TMS may go beyond load booking, expanding to critical components such as a 360-view of the transportation process from procurement through fulfillment. In addition, optimizing route planning and logistics upon cargo arrival can ensure efficient cargo delivery.
PREPARE FOR EXTRA FEES
Air cargo can be one of the priciest modes of transport, and rates are fluctuating day by day. Continued supply chain disruption and unpredictability contribute to higher rates. Bottom line: The best preparation strategy includes copious wiggle room in the supply chain’s peak season budget for maximum flexibility.
This year, it’s expected there will be a surge in mode shifts to get goods to market. The driver shortage means less truckload capacity on the road; rail worker unrest could result in delayed or halted rail deliveries; and port congestion can lead to liners waiting for weeks on end in port without the ability to unload. These factors will largely play into customers thinking about a mode shift to air. When these disruptions ease, there may be a whiplash effect as pent-up freight suddenly surges into ports and onto the roads and rails. This can set off a scramble for truck capacity that may push some shippers to again look to the skies instead.
Over the past few months, suppliers’ heightened attention to surge, urge and demand has only intensified as supply chains prove to be unpredictable and air cargo is validated as a natural solution
during times of delay. Among the increased revenue and volume, ongoing labor relations issues, port congestion, disruption and delay, the air cargo industry continues to see increased interest as shippers look to alternative modes to ensure their cargo arrives on time and in full. Shippers are already dealing with tight capacity and high volume. Are your air cargo operations ready for this year’s peak?