A new era of air transportation trends is emerging to create a confusing outlook for shippers.
Air freight has been in nonstop peak-season mode despite pandemic-induced capacity decline, while other disruptions, such as the Suez Canal blockage, drove even more demand to air. This is all happening while the Transportation Security Administration is reporting a 1000%+ increase in passenger travel in April 2021, compared to April 2020, with the vaccine fueling hopes of getting back to a sense of “normalcy.”
Though vaccine distribution is increasing, and we are seeing a spike in passenger travel, capacity relief is not on the horizon. Why not? Most current air travel is domestic, meaning that planes are still not populating major global trade lanes.
In fact, numerous commercial flights are being canceled a few weeks before takeoff because passenger demand is not there. For passenger travel to have an impact on air capacity, business travel will need to return to pre-pandemic levels, That’s not likely to happen anytime soon. Right now, cargo is king and leading routing decisions for most airlines.
With this in mind, there are three tactics that you can bring into your shipping strategy to navigate the current capacity constraints in the air market.
1. Prepare for the permanent changes that will impact the future of air travel
While cargo planes and charters seemed like temporary fixes for shippers in a pinch, they’re quickly becoming necessary for the long term. Even with business travel becoming more viable, it is estimated that business travel will not reach 2019 levels until 2025. Plus, tight budgets and the newfound appreciation for virtual communication may keep many international planes grounded.
Therefore, depending on the slight uptick in commercial travel is not wise. Global shippers will need to look at how cargo planes and charters fit into their shipping strategies long term. Finding the correct partners and resources will be more important than ever as these modes of shipping continue to be needed.
2. Flex your creative muscles
Consider the new level of creativity that these air freight challenges are requiring and how you can do things a new way. For example, to get a timely shipment out for a global customer, we removed the seats from a passenger aircraft to make room for important shipments. Additionally, the plane was routed to a non-traditional cargo hub to avoid the additional delays and congestion found at more popular airports.
That may not be the right muscle to flex in your supply chain, but thinking outside the box is crucial. Depending on your goals, the end strategy will look different.
3. Consider using a mix of modes and ensure you have a partner that can accommodate
A mix of modes doesn’t just mean putting things on a ship when there is no room on aircrafts. Sometimes, it means using a mix of transportation modes for one shipment and being flexible to change on a dime. It all depends on your unique situation, but you must be agile and find the right partner to guide you in the correct direction.
We used this strategy on a recent project with Thomas Scientific, a laboratory equipment provider. We helped them work through the extreme ramp up of demand for COVID-19 related items such as masks, gloves, PPE, and testing supplies.
Prior to the pandemic, most of their business was domestic, requiring only a handful of ocean containers each year to accommodate their international shipping needs. However, they faced a sharp increase in demand in 2020 for COVID-19 test kits and needed to develop an international shipping strategy quickly.
Through our global suite of service offerings and information advantage, we worked with them to create tailored solutions to secure the capacity they needed. We focused on a multimodal distribution strategy based on time and needs. Shipments have since gone directly to customers through less than truckload, truckload, ocean, and air charter.
Once inventory levels are stable and demand shifts as we expect it to, we’ll help them move some COVID-19 test kits to ocean. As warehousing space is tight, making this switch will not only promote cost savings, but also help avoid storage backlogs.
Together, we have implemented strategies that have given Thomas Scientific the ability to quickly change directions as needed.
Despite the challenges that are currently present in the air market, rest assured that there are new ways to get creative and work with your logistics partner to create a long-term plan that navigates capacity constraints.
To stay updated on market trends and how they will impact capacity and pricing, visit our Global Forwarding Insights page.
To dig even deeper, connect with a logistics provider.