New Articles

Airfreight Prices Reach New Heights Ahead of the Holidays

airfreight

Airfreight Prices Reach New Heights Ahead of the Holidays

Numerous analysts agree that the upcoming holiday season could bring numerous supply chain challenges resulting in sold-out products, delayed replenishments and disappointed customers. Airfreight cost rises are already emerging as an obstacle in the mix.

Capacity Shortages and Rising Demand

Insights from airfreight logistics professionals and other people in the know suggest that reduced capacity on flights coupled with surging demands are two factors contributing to the current conditions.

An analysis of air cargo rates for September 2021 illuminates how all regions could experience the effects of more logistics professionals availing of air cargo services when they can. The push to secure spaces has pushed some major brands to invest in their own planes. However, smaller retailers are often left out because they lack the resources to cope with higher rates, let alone dedicated aircraft.

Global demand levels were up by 9.1% compared to figures collected for September 2019. Unfortunately, available capacity is 8.9% below pre-COVID-19 levels. However, other sources clarified that although volumes are up, not all planes are full.

When the report drilled down into regional situations, it revealed that Asia-Pacific airlines saw international cargo volumes rise by 4.5% compared to September 2019 figures. European carriers saw a similar 5.3% volume increase, and demand went up by 6.9% for the North Atlantic trade lane.

African, Middle Eastern and Latin American carriers felt even more intense pressure during the studied period than in September 2019. African airlines coped with a 34.6% jump in international cargo demand, while those in the Middle East and Latin America had overall upticks of 17.6% and 17.1%, respectively. The capacity shortage was particularly pronounced for Latin American air cargo specialists, with availability down more than 24% on 2019 levels.

Air Cargo Still an Appealing Option

Since goods often travel incredibly long distances to reach their destinations, intermodal transportation is increasingly necessary. It involves using at least two methods, such as a ship and a truck, to get cargo to the right places. However, it’s not always easy to choose the best options. That’s because airfreight is not the only sector saddled with extra demand.

In the United States, March 2021 container volumes for the Long Beach and Los Angeles ports were up 97% on the previous year, resulting in the busiest March recorded so far.  Also, the United States, Europe and Great Britain are among the places dealing with truck driver shortages.

While facing those obstacles, logistics professionals may understandably conclude air cargo carriers are among the best options, provided they’re willing to pay the associated rates. One issue is that many experts believe port backups won’t resolve anytime soon. A proposed solution to keep some United States ports open 24 hours may not be enough to make significant impacts, either.

Those realities have pushed more people to consider air cargo as a possibility. Bruce Chan, a senior analyst at investment bank Stifel, said, “Terminals and container yards are full. Drayage capacity is tight due to structural driver supply issues, as well as compounding disincentives to pick up from ports as a result of the delays.”

He continued, “As such, we believe there is a contingent of inventory that will not arrive in time for the seasonal rush via ocean and that freight may be converted to air.” Numerous logistics professionals have nonetheless warned consumers to expect product shortages this year. Some have recommended that shoppers take pictures of items and put them into holiday cards in case the actual products show up late.

A Few Things to Know Before Considering Airfreight Options

Shipping things by air is often the most desirable method when speed is a priority. Plus, delicate items, such as electronics and designer clothing, are among the products that most commonly travel in planes.

Airfreight cost averages were typically higher than other transportation methods even before these recent rises. Therefore, shipping more expensive items by plane was a popular choice because the hope was that the higher product revenue would justify the expenses.

However, carriers don’t accept goods in all cases. For example, aerosols with an aggregate weight of more than 150 kilograms cannot travel in a passenger aircraft. People should take the time to verify that cargo specialists will accept their products rather than assuming that’s the case. All forms of product transportation require considering things like weight and flammability to ensure safety.

It’s also more complex to prepare products for shipment by air versus sea. The cargo gets loaded onto a pallet in a warehouse, wrapped with plastic, and secured with cords and ropes. Packing the products together as tightly as possible is critical because shifting significantly during a flight could cause the plane to crash.

These details mean that even if someone is prepared to deal with rising airfreight costs, they must take the time to check that plane-based shipments are right for their products and their overall needs.

Passenger Air Travel Increases Could Decrease the Crunch

Even if there are no significant airfreight cost decreases on the horizon, an expected bump in passenger flights could ease the current capacity issues. For example, the United States recently reopened its borders to many international travelers who can show proof of their COVID-19 vaccinations.

The largest cargo holds in passenger planes’ bellies accommodate the equivalent of two 40-foot freight containers. At one time, they carried as much as half of the total air cargo capacity. Many airlines expanded their cargo space during the pandemic, but it still did not compare to levels seen previously.

Part of the reason was that airlines most dedicated to expanding cargo capacity limited the changes made. Representatives worried that demand could dry up in the future, meaning any efforts to expand cargo space might only bring short-term payoffs. However, the anticipated passenger flight boom won’t universally affect available areas.

Logistics professionals expect the most benefits to come from planes carrying people between the United States and Europe. However, the effects will not be as notable for transpacific flights.  For example, many pandemic-related travel restrictions remain in effect for China. Plus, more passengers originating in Europe traveled to the U.S. than to Asian destinations even before the pandemic.

Airfreight Logistics Are Continually Complex

People considering shipping goods by air have many pros and cons to weigh, and that was the case before rates began climbing. Being aware of those aspects will help them conclude whether the cost is worth the money when considering all other factors.

_____________________________________________________________________

Emily Newton is an industrial journalist. As Editor-in-Chief of Revolutionized, she regularly covers how technology is changing the industry.