In a recent report released by the International Air Transport Association (IATA), air cargo volumes continued to skyrocket almost 10 percent in June, revealing that the first half of 2021 rivals the historic cargo volumes of 2017. This unprecedented demand for airfreight comes at a time when commercial airlines are incredibly restricted. For the last 18 months, most passenger aircraft routes have been scaled back, creating the disappearance of precious cargo-hold capacity caused by ongoing travel restrictions from the COVID-19 pandemic.
Regarding the first half of 2021, IATA reported that “passenger capacity sequentially improved 2.3 points in June, but was still down 60.1% from 2019 levels. And the critical international travel sector, in which widebody aircraft predominate, is still down 80.9%.”
As passenger service slowly comes back online within North America and Europe, cargo capabilities are seeing nominal increases in specific areas. However, in other parts of the world, like Asia, where passenger service is not yet returning online, this creates an ongoing domestic and intercontinental cargo capacity gap.
Some airlines have found a way to mitigate their losses by converting passenger aircraft to accommodate cargo within the passenger cabin, essentially creating cargo-only commercial flights. As a result, the industry has called these new routes passenger-freighter flights or “preighters.” Some use seat bags and overhead bin space to accommodate freight, while others have chosen to remove seats altogether. These aircraft have been carrying primarily pandemic-related goods; however, in certain regions like Asia, the industry anticipates cargo-only passenger flights to play a more significant role in assisting with the supply shortage of general airfreight.
However, there are significant issues with these types of aircraft as loading is time-consuming. There is also a labor shortage across many airports worldwide. Current reports indicate that airports in Germany and Belgium see airlines choose not to offer this valuable preighter service. Some airlines are even rerouting schedules to alternate airports due to the lack of personnel required to load these flights. In some cases, airlines are forced to depart before the aircraft is fully loaded, causing further chaos and delays for shippers.
Unfortunately, the resurgence of COVID-19 and the Delta variant is playing a significant role in limiting the reopening of international and, in many countries, domestic air travel. Airfreight rates continue to soar as airports are shut down, such as Nanjing Airport, located just west of Shanghai, China. With rolling lockdowns and stringent quarantine requirements across much of that region, stoppages like this create tidal waves in an already fractured supply chain. Limited capacity means even higher rates. This week, rates from Shanghai to Los Angeles, Chicago and New York have reached $9.60, $11 and $12 per kg, respectively.
Labor on the ground also continues to impact rates and creates delays, even stateside. For example, Chicago O’Hare International Airport, a major hub for airfreight imports that continue to arrive into the U.S. at an unprecedented pace, faces significant delays in processing, causing a ripple effect of scheduling issues throughout the industry. One provider, Cathay Pacific, has suspended carrying some types of cargo until August 16, 2021, in hopes of clearing some of its backlogged freight, which has arrived on U.S. soil but has not cleared the airport warehouse facility.
Airlines and cargo handlers worldwide face making difficult choices and strategizing how to handle these extraordinary cargo volumes while navigating the thinned workforce pool. Every cargo deferment, coupled with every overwhelmed warehouse and equipment change, is another factor that ultimately adjusts scheduling and constricts availability in the supply chain, driving costs to new highs.
So what does this mean for 2021’s seasonal rush? Shippers can expect to pay even higher rates than the already astronomical rates in today’s market. As inventory levels dwindle, causing the need for continued goods to be imported and the resurgence of COVID-19’s Delta variant jeopardizing laborforces worldwide, there is no choice but to forecast continued issues. The insertion of costumes and candy, specialty foods and holiday gifts into the already inundated airfreight market only further tighten capacity and see prices skyrocket. Some may accuse airlines of taking advantage of these unprecedented times. However, today’s capacity limitations and premium rates are far beyond what anyone could have anticipated a year ago.
Plan ahead! Ensure that seasonal shipments are booked within a few weeks, leaving plenty of time to absorb delays and issues that may arise. Also, ensure your needs are communicated to your 3pl and be willing to work closely with them as they navigate this tumultuous season on your behalf. Finally, a trustworthy freight forwarding partner who has the provider relationships and professional experience to secure space and rates at a time like this is essential.
Ascent Global Logistics offers this and more. Ascent helps its clients simplify supply chain management by providing customized solutions, premium customer service and state-of-the-art technology. Our depth and expertise across all modes and a firm grasp on current industry impacts afford clients creative shipping solutions, helping clients succeed, even when seemingly impossible.
Who says logistics has to be complicated? We certainly didn’t. Contact the Ascent team to learn more.