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Futureproofing Your Supply Chain: How Air Freight Can Support Your Business Amidst Disruption

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Global Logistics, Global Trade Daily

Futureproofing Your Supply Chain: How Air Freight Can Support Your Business Amidst Disruption

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Boats, planes, trains, trucks – when you start to add up all the global freight transportation options available and factor in constantly changing economic and geopolitical elements, it can be difficult to predict which will be the best mode for your freight. Having access to and knowledge of various options is critical for businesses who want to maintain a dynamic supply chain. Recently, the global air freight market has gained recognition for its benefits of speed and agility in the wake of disruptions.

An excellent example of this happened in 2020 when the demand for global air freight took off out of the necessity to move PPE, medical equipment, and other just-in-time inventory amidst the COVID-19 pandemic. With fewer commercial planes flying passengers and therefore less belly capacity, airlines were able to quickly increase capacity through cargo planes and businesses were able to capitalize on the speed of air freight.  

The outlook for air freight, however, hasn’t been so sunny over the last few years. In 2023, as supply chains finally started to iron out following years of expensive delays and disruptions, the demand for air freight dropped as business returned to ocean shipping as consumer behavior shifted and many looked to recoup costs after paying premium transportation costs during the pandemic. 

As new disruptions arise in 2023, however, the role of air freight remains an important option for a robust supply chain. For the first time in months, the demand for air freight has grown. Not because air freight is a direct cost-saving option, but because it is largely able to avoid disruptions other transportation options cannot. As businesses work to futureproof their supply chain from major delays and inventory shortages, as well as complex geopolitical factors, this trend towards using air freight to diversify your supply chain is likely to continue into 2024.

Here are 3 factors contributing to the growth of air freight into 2024:

Expanding Nearshoring Opportunities

After a few years of rollercoaster-like supply chain conditions, many businesses are recognizing the benefits of having their manufacturing operations closer to the products’ final destination or customer. Nearshoring, reshoring or friend-shoring has become increasingly popular as businesses are shaking off the damages caused by past and ongoing disruptions including labor issues at ports on the West Coast, mis-forecasted inventory and other supply chain delays. 

The transition of nearshoring, however, doesn’t just happen in the blink of an eye – it can often be rocky. As businesses adjust to completely new supply chains, air is used frequently to keep up with inventory as moving supplier components can be more difficult than just relocating manufacturing facilities. While it might not be the most affordable option long term, air freight is a popular mode for supporting businesses who are looking to quickly nearshore their operations. 

Congestion at the U.S.-Mexico Border

Several factors, including technology issues at customs, increased border security, and crossing closures created congestion and a backlog of shipments at the U.S.-Mexico border at the start of this fall. For some routes, these disruptions added nearly 15 hours to transit times, causing many to pivot to air freight to avoid delays at the border. 

For one industry in particular – automotive manufacturing – these delays plus recent strike activity created the perfect storm of disruption. The automotive industry has historically relied on just-in-time inventory management to drive efficiency, so delays can have detrimental effects on production. Many C.H. Robinson automotive customers looking to transport goods out of Mexico to mitigate further supply chain risks from strike activity, for example, were able to secure air charters in as little as a few hours. Air remains a major player even when strikes end as manufacturers  get caught up on production and suppliers need to ship inventory quickly to avoid a line-down situation. Air freight allows businesses to keep goods moving when other modes aren’t working efficiently enough. 

While the congestion has waned from the disruptions mentioned above, the growing demand and volume for U.S.-Mexico cross-border shipping through nearshoring and other trade incentives that make the countries an attractive option for many companies, could lead to more consistent congestion or bottlenecks in 2024.  

Holidays and Increased Retail Activity

While often more expensive, air freight is also a critical tool for specific industries and during certain times of the year. For example, medical equipment, electronics and trend-driven retail industries leverage air freight as they cannot afford major delays in the supply chain due to their timeliness.  

While consumer spending isn’t as high as it was during the beginning of the COVID-19 pandemic, it remains high given the current economic outlook. Many predicted that there wouldn’t be a peak holiday season in 2023, and while it is mellow compared to the last few years, it is forecasting similarly to what we experienced before the pandemic. 

Electronics, for example, typically has a few major new product drops throughout the year. With these new devices, consumers typically need additional accessories like cases or chargers. Air is used for these goods to ensure they can arrive on time with the new technology. Additionally, as fashion trends evolve, brands cannot afford delays as the marketability of their goods relies on timely trends or fads. As ocean carriers use blank sailings to adjust to lower demand, air is far more reliable and mitigates the risk of last-minute delays. To keep up with this demand for quick-turn consumer goods, air freight will remain a good option in 2024 for those who can’t afford to miss their window of opportunity. 

Building Contingency Plans

Since 2020, supply chain professionals have collectively learned that while air may cost more initially, the potential savings from avoiding delays and inventory shortages make it a worthwhile investment and key element of any contingency planning and diversification strategy. While we can’t predict the future, we know disruptions and unforeseen factors are inevitable. Understanding supply chain solutions like air freight is a critical way to prepare for the unknown and futureproof your business as we move into 2024.  

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Archives, Global Trade Daily, Special Reports

In the Push for Faster Ecommerce Deliveries, How Can Logistics Stay Agile?

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Today’s consumer isn’t used to waiting. They expect to get whatever product they want, wherever they want it, as soon as possible.  Perhaps nowhere is this more true than in the world of ecommerce. Customers look forward to their online purchases arriving faster than ever – sometimes on the same day that they click “purchase.” And with drone doorstop delivery on the horizon, compressed delivery timelines show no sign of stopping anytime soon.

Faster ecommerce delivery has created revolutionary convenience for consumers, but it’s also generated major transportation hurdles for companies to overcome. As a result, companies that want to deliver ecommerce shipments at the speeds that customers expect need to consider how to adapt all elements of their supply chains.

Managing more intricate logistics

Some companies that raced in to capture an early share of ecommerce market struggled to keep up while also keeping costs down. But that’s to be expected with a more complex distribution model.

Instead of shipping mostly to stores, companies now must determine if their supply chains can quickly move orders to many consumers in many locations. To do this, they must be able to proactively coordinate shipments whether they’re on the ground, on the ocean or in the air. 

Companies can help manage this complexity by taking a more hands-on logistics approach. They should draw on a variety of services and resources, while remaining efficient and visible. 

Many shippers, for example, choose to work with a third-party logistics provider to help facilitate the intricate details of shipments, provide visibility, and help freight arrive in a timely manner. 

Fixed or Flexible?

One of the biggest decisions a company in the ecommerce market will make is how they balance their supply chain. 

For example, a supply chain that’s more focused on fixed infrastructure than the fluid movement of goods can lower a company’s costs in the long run but also make them less agile. While a service-heavy, asset-light supply chain can make a company more flexible but also raise their costs.

Some companies are drawing a line in the sand. Some online businesses, for example, are rejecting ecommerce’s expectation of immediacy. Instead, they’re building supply chains that prioritize volume over speed. 

This has pushed ecommerce sellers to start providing more shipping time options. But it’s still unclear whether having more choices will lead to consumers changing their delivery expectations.

In any case, ecommerce fulfillment encompasses several, often-contradictory considerations of time, cost, and transportation mode. To bring these factors together through informed decision making is a challenging undertaking. But it’s essential for any company that wants to compete as ecommerce continues to grow and its barrier to entry continues to fall. 

Taking the first steps

Data goes hand in hand with ecommerce, so it can be a good area for a company to make its first key investment. 

Specifically, advanced business intelligence and predictive data modeling help companies better understand and forecast consumer demand, and they can then adjust their supply chains accordingly. Through access to this data and integration with service information from their shippers, companies can better identify their priorities and decide where to invest resources. 

Those that don’t know where to start should also know they don’t have to make these big decisions on their own. Industry experts like C.H. Robinson can offer a clear perspective—based on their scale and local experts in offices around the globe—and will understand their specific ecommerce business needs and translate them into productive logistics solutions. 

 

Archives, Global Trade Daily, Special Reports

Integrating Air and Inland Transportation Solves Unique Challenges

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Plenty of challenges can surface in the course of executing global logistics, no matter what industry you’re in. The ability to work with one company to service all your transportation needs – including ocean, air, customs brokerage, trade compliance, vendor management, and surface transportation is vital for having immediate and integrated alternatives to solve problems. This capability may be most valuable when it comes to air cargo solutions—where the clock is always ticking, and time is not on your side. Here’s how some companies have collaborated with C.H. Robinson to develop their integrated air-and-surface-transportation solutions.

Merchandising support for retailers

For retailers, launching a new video game successfully requires more than just the game itself. Merchandising support—in the form of posters, kiosks, and other materials that promote the product—is absolutely essential. So, when one company won a licensing agreement to merchandise a hot new video game to retail centers, they looked for an integrated logistics program that would help them meet the release deadlines.

As is true of any bid for logistics services, the company could only share so much information in their request for proposal (RFP). The RFP had called for air charter lift services, but once they awarded the bid to us, we learned more. While the ship dates for the merchandising were uncertain, delivery deadlines were firm, and the company faced stiff penalties from retailers if they missed delivery deadlines. This information led to a review of cost and available commercial air lift options and recalibration of the initial plan.

The resulting plan was fully integrated and lasted for roughly three months. It included a seven-day air transport, airport to door, from Asia into our warehouses at Los Angeles International Airport or Chicago O’Hare International Airport. The plan had to be flexible, and required extensive coordination. So, C.H. Robinson flew in personnel from our Miami office to the distribution centers in Los Angeles and Chicago to oversee all aspects of the handling and ensure that any last-minute problems could be resolved in real time.

At the warehouses, shipments were broken down, repackaged, and segregated for delivery. Working backward from the in-house delivery date to ship dates, once known, the team selected the best transportation type to deliver to retailers in time.

The challenges that surfaced in these moves required flexibility so that shipments could be moved via a variety of transportation modes. As products arrived at the warehouse and were segregated, faster or slower forms of transportation would be selected to hit the firm delivery dates. If there was sufficient lead time, less than truckload (LTL) shipments might be the best, most cost effective option; if time was tight, the freight might be shipped by the full truckload with team drivers. Wherever possible, LTL shipments would be consolidated and be delivered by multi-stop full truckloads for greater savings.

Overall, the project required coordination of air freight and warehousing, plus full truckload, consolidation, or LTL deliveries from the warehouses to 30 U.S. destinations to meet delivery deadlines. With onsite coordination, the company had an on time delivery percentage of 99% at the retail locations.

Shipping urgent product to bring an automotive plant back online

Automotive production lines have rigorous delivery requirements. Shipments are timed precisely so they arrive just in time for production. If anything goes wrong and materials don’t arrive as expected, entire plants can shut down, putting hundreds of people out of work and costing companies millions.

So, when an automotive plant in the United States went down, they contacted another original equipment manufacturer (OEM) for help. The OEM needed to obtain product from six European suppliers and get them to the plant as soon as possible.

At the time, air capacity was not as accessible. So, our team looked for the next-best alternative: partial charter for several skids of critical materials. The product was flown into Chicago, where a team of drivers was waiting. Due to pre-clearing customs, our team was able to breakdown the aircraft and load the trucks within two hours. Once the trucks were loaded at the warehouse, they headed inland to complete the delivery.

Speed and efficiency were vital in delivering the product to our customer. Our skill is to find and offer different solutions to achieve the client’s goals and get the plant back in operation as quickly as possible.

A solution for urgent heavy-lift shipments in the automotive industry

Sometimes urgent freight comes in big packages. A company in the automotive industry urgently needed to ship machinery from Chicago to Liuzhou, Guangxi, China. Because this was a last-minute request, however, their regular crating company in Michigan was unable to complete the job in time. That’s when the company contacted the C.H. Robinson project logistics team to find alternatives.

Our team not only had a long-time relationship with the company, but also with crating companies in the Chicago area. The team used their knowledge, flexibility, and connections to find outside-the-box solutions, arranging for crating to take place the following day. As the crating was underway, the company also awarded the transport portion to C.H. Robinson.

The urgently needed freight had to be shipped by air. Thirteen crates totaling 166 cubic meters and 44.6 metric tons were transported for the company, with the largest piece weighing 14 metric tons. Cranes were used to load the 13 crates onto the aircraft for transport from O’Hare in Chicago through South Korea to Guangzhou Baiyun International Airport in China. From there, the crates were transported inland to the customer’s door in Liuzhou, Guangxi, China.

The company’s decision to work with one company to service all their transportation needs—including crating, air freight transport, and inland transportation service, provided a solution for their urgent deadline. The cargo was able to be delivered safely and quickly.

What it takes to integrate air and inland transportation solutions

In logistics, there’s simply no substitute for integrated problem-solving. Nowhere is that truer than with urgent freight requirements that require a multi-pronged transportation solution.

When freight absolutely positively has to be there, challenges are sure to arise. Companies can work closely with their logistics provider to select the best, most flexible options to meet their goals. With proper coordination, and by working together, shippers can easily achieve their supply chain objectives—in the long and short term.

Matt Castle is Vice President of global forwarding products & services at C.H. Robinson