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A survey carried out by booking portal Freightos found that 46% of air cargo carriers now enable instant rate searches for quotes on their websites compared with 10% in 2019.

Meanwhile, 33% offer e-booking with instant confirmation compared to 25% in 2019.

But there is still room for development, with 21% offering instant allotment booking and 4% allowing payments to be made online.

Freightos said that the most widespread digital stride among air carriers was the leveraging of third-party platforms to extend their online reach.

The research shows that 46% of leading air carriers provide instant rate search through third-party platforms and 42% also enable e-booking through these channels.

Shipment tracking is also widely available, with 42%providing this as an option.

Freightos said the adoption of third-party platforms was higher in air than ocean, where just 18% offer e-booking on portals.

“In the fragmented air market – compared to the consolidated ocean market and the growing leverage the pandemic has shifted to ocean carriers – airlines are eager for the low-touch access to new customers, new segments and new geographies that platforms represent, even at the cost of making price and service comparisons easier,” Freightos said.

“And the volatility of air cargo during the last two years served as a catalyst for this trend.”

The overall shift to digital booking was accelerated by the pandemic, the company said.

“The rush on PPE early in the pandemic, just as passenger travel plummeted, was an extreme example of the volatility in the air cargo industry over the last two years.

“The fast pace of air transport only quickened as labour shortages and ever-shifting quarantine requirements led to frequent operational changes.

“This environment accelerated the ongoing search many carriers had already been engaged in for improved internal efficiency and faster ways to communicate and transact with customers.

“Like in ocean freight, the pandemic accelerated the pre-existing trend toward digital connectivity.

“While carriers made gains in their website offerings and API connections, the biggest shift was in leveraging third-party platforms to extend their reach.”

Johnny Rubio, chief commercial officer of Silk Way West, said that online booking portals allowed carriers to introduce e-booking without a massive amount of investment in resource and capital and also makes its services more visible to a wider customer base.

IAG Cargo head of distribution Peter Roberts added: “Not only have our e-bookings increased, but the average weight per e-booking has too, suggesting that customer trust is growing.

“In addition to improving both customer satisfaction and our reach, the data unlocked through e-booking enables better business intelligence and a data-driven strategy.”

Source: www.aircargonews.net

Image: www.pexels.com

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For more than a month, the Ukrainian army has been resisting Russian occupation in a bloody battle. Although the people of Ukraine and Russia suffer most directly from the war, the rest of the world has also indirectly fallen victim to Putin’s decisions. I have already explained the impact the war in Ukraine has had on the freight sector as a whole, but I would now like to highlight the ongoing air transport sector. It is currently suffering not only from soaring fuel prices, but also from a lack of capacity, which is also having an irreversible effect on consumer wallets around the world.

Capacity is affected not only by ban but also by destruction

In early March, two weeks after Russia’s invasion of Ukraine, Northeast Asia-Europe’s transport capacity had fallen to 22% since the pre-war period. Now, almost a month later, it is even lower. The capacity of air carriers is most affected by the sanctions imposed on Russia. As a result, the delivery of goods to Europe is banned for the largest Russian cargo airline operator Volga-Dnepr, whose subsidiary AirBridgeCargo has more than 800 different cargo aircrafts. However, this is not the only aspect that affects the capacity of hauliers. Aircrafts destroyed as a result of war, which rubs salt into the wound of the industry, also play an important role. For example, in the battle against Hostomel Airport, the industry lost a historically unique specimen – the world’s largest cargo plane, the Mriya. Although the Ukrainian government has announced that every effort will be made to rebuild the plane, it will take time and at least $ 3 billion. It has also recently been confirmed that AN-26 and AN-74 aircrafts have been destroyed as a result of the Russian invasion.

To Asia around Russia

Due to the war, many air carriers have decided not to cross the airspace of Russia, Ukraine and also Belarus, citing the safety factor of employees as the main reason. This position has been publicly confirmed by industry giants such as UPS, DHL and FedEx, which own about 1,000 cargo planes. I believe that not only the issue of security, but also the image and political pressure of the company played a major role in making this decision. Now that most companies in various sectors are leaving Russian territory, thus clearly expressing their political position, the big logistics and freight companies must not lag behind either. It is clear to them, as to any other business expert, that the image of a company is easy to tarnish but hard to polish, and the smartest way to avoid becoming a black sheep right now is to turn your back on Russia.

Consumers become the victims

A series of all the above decisions and events will inevitably increase the costs for air cargo carriers, which will not only hurt market players but also consumers. There are already companies in the industry that are increasing the additional costs for international freight. One of them is FedEx, which took such a step in March. Although the company is one of the first to change its pricing policy as a result of events, it will certainly not be the last.

The most logical solution – more cargo planes

Once again, as in the Covid-19 outbreak, when the industry was struggling with a lack of capacity, the most effective solution is to transform passenger planes into freight transport. Such restructuring of airlines would significantly increase the capacity of air cargo carriers. Moreover, according to Insider, it is more profitable than buying new cargo planes. According to the media, such a move could save companies hundreds of millions of dollars. Airlines such as Qatar Airways and the Emirates Group, known to the general public as passenger airlines, took this step in early 2020. At the end of March, Alaska Airlines joined them, adapting five different passenger planes for cargo transportation.

Whatever the future decisions of air carriers, one thing is clear: only by working together in a crisis situation will it be possible to meet the needs of both the industry and the customer.

Author: Roland Peterson, logistics expert

Image: www.pexels.com

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The forwarding sector said the airspace restrictions imposed by Russia, European states, Canada, the UK and in North America were forcing airlines to cancel and adjust services.

“Adjustments to flight schedules are unavoidable and increased transit times must be expected. As a result, we also expect a financial impact on airfreight rates,” warned Copenhagen-headquartered forwarder DSV. “We are not able to provide an exact estimate of the impact at this stage.”

It added: “Due to ongoing developments in the Russia-Ukraine conflict, several air carriers have stopped using Russian airspace. This will have a direct effect on air freight services in the coming period.

“DSV is in close dialogue with our carriers to find alternative routings to ensure we provide the best possible service for our customers.”

Kuehne+Nagel warned: “Due to the closure of the air corridors over Russia and Ukraine and the mentioned sanctions, we foresee capacity restrictions and, as a consequence, longer lead times.”

Scan Global Logistics (SGL) said that fuel prices will contribute to higher rates.

The forwarder pointed out that one of the most affected airlines will be Russian carrier AirBridgeCargo, which is blocked from European and North American airspace, two of its biggest markets.

“Overall we expect the current situation will trigger an immediate capacity constraint across transport modes, as well as pressure on freight rate levels, including oil price increases.”

SGL said that many airlines have already initiated to suspend a number of flights and design alternative routes, leading to extended flight time and increased fuel cost.

“Russian freighter carriers Airbridge and Volga are significantly impacted. They have cancelled the majority of flights to/from Asia, with this having a significant overall capacity impact. Asian airlines are not banned from Russian airspace, however, note, we also see Asian-based carriers cancelling flights.”

Singapore Airlines, Swiss, Japan Airlines, FedEx, and UPS have suspended direct flights to/from Russia, SGL said.

Flexport said its research showed that average flight times on six key trade routes from Asia to Northern Europe have increased by 3.4% (range 0.6% to 6.9%) in the five days to February 28 compared to the December 1 through February 22 period.

“The most significant impact is the need for rerouting around the conflict zone, extending transit times, and increased carbon emissions,” Flexport said.

“Some flights between Asia and Northern Europe will need to be rerouted via new southerly routings over Saudi Arabia, amid restrictions linked to Iran, Syria, and Yemen.”

The company added: “It is worth noting that many flights from China and the northern part of Southeast Asia as well as South Korea and Japan typically travel north of the affected region.”

The forwarder pointed out that Antonov’s fleet of freighters – mainly used for heavylift operations – are also affected.

It said that all but five of its freighters were in Ukraine in the days before the start of the conflict.

The remaining five, all AN-124 class with 150 tons capacity each, landed in Europe or the US in the days before.

The forwarder added that several lease firms have reportedly confirmed they will end their contracts with Russian airlines.

The 43 jets of the Volga-Dnepr Group, which includes AirBridgeCargo, features 27 Boeing and 11 Antonov jets. For Aeroflot, 82% of its fleet are Airbus or Boeing planes.

Sanctions could also hit the provision of aircraft parts making maintenance operations difficult.

Despite this, AirBridgeCargo has continued flying since the start of March with more than 15 flights completed, according to FlightRadar24. Destinations include Shanghai, Beijing, Hong Kong, Dubai, Shenzhen, Seoul and Bahrain.

However, Flexport said the loss of Russian cargo capacity will have less of an impact on the overall market than the extended transit times.

“The impact on global airfreight may be minimal given both airlines each represented less than 0.5% of global airfreight carried in 2019,” Flexport said.

Source: www.aircargo.com

Image: www.aircargo.com

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This is according to the latest data from industry analysts CLIVE Data Services, which found chargeable weight in February was at 0.7% down on the pre-Covid level in 2019, and up 2.6% compared to February 2021, with capacity in the market down 5.4% and up 6.9% to the respective 2019 and 2021 figures.

However, CLIVE warned that the war in Ukraine means the air cargo market is heading into another period of significant uncertainty with a rise in rates.

“Airfreight market conditions feel insignificant when you see what is happening in Ukraine and the suffering of the Ukrainian people since Russia’s invasion,” said Niall van de Wouw, managing director of CLIVE Data Services, which was acquired by air and ocean rate data provider Xeneta in January.

“The war in Ukraine is another example of an external event of which the air cargo industry has no control over, but which is having a profound impact, as happened with Covid. When we consider the recovery of the aviation industry from the pandemic, the return of passengers is still a big question mark. The war in Ukraine presents another big question mark, particularly over Europe-Asia trade flows. It is difficult to overestimate what this could mean down the line.”

The sudden drop in capacity on Europe-Asia routes and overflight issues were already having an effect into North East Asia routes in the closing days of February, he said. CLIVE is closely monitoring the situation on a daily basis. Rising oil prices are also expected to significantly impact global airfreight rates.

“Whilst we were seeing some clear signs of normality returning, there is still so little slack in the global air cargo system. It is quite unlikely that the trend of slowly declining rates will continue in March,” said van de Wouw.

“The war in Ukraine causes immediate capacity issues to North East Asia and, therefore, will likely  push up rates even more for these particular markets. Air cargo trucking services might also be affected as numerous Ukrainian drivers – which form an important share of the truck drivers in Europe – have decided to go back to their home country.

“A fragile global air cargo supply chain is already sensitive to minor shocks. War in Europe and its resulting sanctions could turn the industry upside down once again, just at the time when the covid impact was looking more under control. We remain in volatile and uncertain times.”

CLIVE’s weekly and monthly analyses of the general air cargo market continues to measure performance to the pre-Covid 2019 level, as well as giving 2021 year-over-year comparisons, to provide a meaningful assessment of its current performance.

Consequently, CLIVE’s ‘dynamic load factor’ – which considers both the volume and weight perspectives of cargo flown and capacity available to produce a true indicator of airline performance – of 65% was 4.5 percentage points lower than in 2021 and close to two percentage points higher than in 2019.

After the peak season pressures placed on supply chains in November and December, which saw average airfreight rates increase by as much as 168% in the final month of 2021, the quieter market conditions at the start of the year saw overall rates ease for a second consecutive month.

Rates, while still very high, were seen to be slowly winding down in February  – up 137% versus 2019 – as capacity returned to the market and the stress on supply chains seen over the past two years began to ease.

General air cargo volumes in January 2022 recorded a 0.1% increase in chargeable weight compared to January 2021.

Source: www.aircargo.com

Image: www.pixabay.com

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Early this morning, the European Union Aviation Safety Agency (EASA) issued a conflict zone information bulletin covering Kiev, Lviv, Dnipropetrovsk, Simferopol and Odessa flight information regions for all altitudes.

Additionally, as a precautionary measure, the EASA said that operators should exercise extreme caution and avoid using the airspace within 100 nautical miles of the Belarussian and Russia-Ukraine border.

Ukraine’s navigation service, UkSATSE, also suspended the provision of navigation services this morning.

FlightGlobal reports that Russian federal air transport regulator Rosaviatsia says that flights to a number of southern Russian airports are “temporarily limited” owing to “aggravation of the situation in Ukraine”.

These affected airports include Rostov Platov, Voronezch, Krasnodar, Anapa, Stavropol, Gelendzhik, Belgorod, Elista, Bryansk, Kursk, and Simferopol.

The moves comes as Russian military convoys entered Ukraine this morning and missile strikes and explosions were reported at several sites in the country.

Meanwhile, Flexport’s supply chain economist Chris Rogers has been examining the potential impact of the Ukraine crisis on trade.

Rogers said that there are four major risks to supply chains: Physical availability of commodities produced in Ukraine and Russia (specifically natural gas and oil); global commodity prices (already high) could surge further – adding to inflation pressures; physical disruption of logistics networks as flights are diverted around the conflict zone and transportation insurance costs are likely to rise; and widening sanctions could complicate customs and billing activities – with in an extreme case Russia excluded from the Swift payments system – leaving many reliant on supplies from Russia without access to key materials.

Rogers added that there is also the potential risk of cyber-security incursions which may include logistics firms as collateral damage.

On the flight diversions, Flexport chief executive Ryan Petersen has already reported (February 22) that one charter flights was forced to divert mid-route. Others are now operating on a different route.

Source: www.aircargonews.net

Image: www.pexels.com

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The Omicron virus may be less deadly than prior variants of the virus, but it is taking a heavy toll on businesses and their supply chains.

The air cargo sector is being hit particularly hard. Schedules are in disarray as flight crews are unavailable because of infection, a patchwork of national policies shuts down routes at short notice, and infections and quarantine measures are decimating ramp and warehouse crews, affecting the flow of cargo.

In probably the starkest example of the impact of Omicron, Cathay Pacific stopped longhaul freighter flights for seven days altogether.

It has since resumed all-cargo service to the Americas at a much reduced level, but management does not expect to be running freighters to Europe through March.

For forwarders, these developments have made finding and booking flights a time-consuming slalom through quicksand.

Like airlines, they have been stretched to the limits since the pandemic started and have little leeway to absorb further complications and hurdles.

In the face of the pandemic this industry has shown remarkable flexibility and an ability to re-think the business, coming up with new solutions that often involved collaboration with other parties, including competitors.

Operators have shared resources and facilities with their rivals to keep cargo flowing.

A second crucial part of the struggle has been the effort to streamline processes and automate repetitive, routine functions.

Most firms are understaffed and can ill afford to waste their precious human resource on activities that a computer can perform. And in the current chaos of schedules and pricing, they do not have the time for this either.

Start with bookings. Before Covid it made sense for forwarders to send out blast e-mails to multiple airlines requesting quotes for a shipment.

How many carriers have the time to respond to this today? There is no reason why pricing queries, and indeed the full booking process, should not be performed online.

Of course, this can only happen if the airlines do their part to make this avenue viable. Posting last month’s rates on their website is not adequate.

They must offer fully functioning booking capability with the latest schedule and price information – ideally through multiple channels, but at least on their websites.

Source: www.aircargonews.com

Image: www.pixibay.com

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This was the takeaway from the World Cargo Summit’s Air Cargo Market Update & Outlook, which focused on the market outlook for 2022 and beyond, hot spots for growth and the outlook for cargo charters.

Niall van de Wouw, managing director at CLIVE Data Services, said the company’s data comparing the fourth quarter of 2021 to the same period in 2019 showed that rates continued to increase on a global level, on average two and half times as high as pre-Covid.

It became tougher to move goods because of the challenges ground handling staff faced in loading/unloading/preighters. This led to congestion, which affected throughput.

“The difficulty in getting goods from A to B pushed up the rates to unprecedented levels.”

In the first two weeks of January 2022 compared to the same period in 2021 rates were up more than 40%.

“Looking ahead we currently see no fundamental changes in the dynamics that are causing these rates to be at these levels that we expect any easing soon.”

Abel Alemu, managing director, Ethiopian Cargo & Logistics Services, added that Covid-related labour shortages and quarantine restrictions “will keep capacity tighter for longer” and this may result in “persistently elevated airfreight rates”.

He added that reduced bellyhold capacity will also contribute to this “upwards pressure on airfreight rates”.

The industry stakeholders agreed that due to full order books for freighters, capacity remains in demand.

Reto Hunziker, group cargo director for charter broker Chapman Freeborn said the company has managed this by using in-house own control capacity including Bluebird Nordic 737s and Magma Aviation 747s, plus third-party carriers. He said that zero LOPA configuration aircraft also helped.

Konstantin Vekshin, chief executive officer of  Volga-Dnepr Group said the company resumed its Antonov 124-100 operations in 2021, but the fleet of 12’s estimated lifespan of 10-12 years is a concern. “It is a very unique piece of equipment and there is no replacement for it.”

Ethiopian Airlines Group is working with Israel Aerospace Industries (IAI) to launch a B767-300ER freighter conversion line in Ethiopia. Alemu confirmed Ethiopian Cargo also currently has 20 preighters.

Ground handling support with regards to staff shortages and restrictions is a major concern.

Alemu pointed out some airports in Europe have said they will not handle preighters, while US ground handlers also have restrictions.

Hunziker said Chapman Freeborn has faced cancelled flights and delayed cargo clearance from airports of up to five days. “We have very big challenges with preighters especially out of China and Kong Kong both into Europe and the US.” As a result, there has been a shift to Vietnam and Korea, where the company operates preighters long term.

Vekshin added that Volga-Dnepr will await China’s legislation this year following the country’s ban on preighters. “If they’re sticking to their plans that maybe a game changer for the industry, at least for 2022…as it will affect all of us.”

Pharmaceuticals, PPE and e-commerce demand are set to continue to be strong drivers for the air cargo industry, according to Hunziker and Alemu.

Alemu said in the second half of 2021 major trade lanes were China-Europe, China-Latin America and South East Asia–US. The company saw major growth in South East Asia and recorded the largest expansion in Latin America.

Hunziker said growth was recorded worldwide in 2021 with China the driver for this.

Van de Wouw said US growth was up 30% in 2021 compared to 2020 when it was hit hard by Covid. APAC growth remained high in 2020 because of PPE trade, so 2021’s growth was not high.

He explained the Europe to US market is much stronger than from the US to Europe, adding Asia Pacific into the US “dwarfs” the market from the US to APAC.

While continued ocean freight congestion and reduced belly capacity is driving air cargo demand, the industry has no control over these factors, so uncertainty over the sustainability of growth remains, said van de Wouw.

He thinks as passenger demand returns “things will get worse” initially as there will be less room for cargo and pressure for capacity, until flight frequency increases but he doesn’t “see that happening anytime soon”.

Source: www.aircargonews.com

Image: www.pexels.com

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Around September last year, the air cargo industry was tentatively hoping that the market could be setting out on the road to normality.

Major economies were slowly opening up as Covid case numbers were showing signs of easing and passenger operations were beginning to get back underway as travel restrictions were lifted.

Then November arrived bringing with it the Omicron variant. Lockdowns, travel restrictions, supply chain issues and reductions in bellyhold and freighter capacity on major trade lanes ensued.

Adding to those challenges, the start of the year also sees the industry having to contend with the two-week Chinese New Year holiday, which typically sees a surge of cargo ahead of factory closures, and this year the Beijing Winter Olympics is expected to cause further disruption.

With the year off to a challenging start, Air Cargo News caught up with a cross section of the industry to find out their expectations for the remainder of 2022.

DSV vice president and head of the DSV Air Charter Network, Mads Ravn, tells Air Cargo News he expects a roller-coaster market with Covid continuing to disrupt supply chains, while bellyhold operations will be slow to return.

“Demand will remain strong in every sector and, as the year has already proven, Covid will continue to play a major role in whether capacity will return,” Ravn says.

“Especially on key routes from China and Hong Kong – where they continue to have some of the most severe restrictions – we need some sort of consistency throughout the year.”

He adds: “Belly carriers are trying to piece a programme together with multiple new seasonal destinations that will not necessarily benefit the lack of capacity in the market to and from core manufacturing sites.”

DSV believes that the return of belly capacity to pre-crisis levels is being pushed further out.

“The initial anticipation of 2025 is likely not happening and destinations serviced will change as business travel is very slow to come back,” he says.

“Therefore, we are focusing on maintaining and developing our own DSV Air Charter Network so we can continue to provide as much reliable and flexible capacity as possible for our customers.”

Ravn says handling operations are also likely to come under pressure this year.

“To secure enough people on the ground is perhaps the most severe challenge in several gateways in North America and Europe,” he says.

“This, combined with outdated US infrastructure and lack of staff returning to work, will also influence and slow down recovery.”

Scan Global Logistics (SGL) says it expects the unpredictability of 2021 to continue into this year.

“We expect the market to be pretty much the same as in 2021; travel-restrictions, no clarity about Omicron and potentially other [variants] to follow, and no, or only limited, additional freighter-aircraft to be supplied to the market.

“This will keep constant pressure on the capacities and rates. [Covid] test kits, ocean challenges, airport/ground handling issues etc will remain, leading to increasing charges.”

Looking at seasonal trends, SGL says that the first quarter will remain challenging with rates elevated, the second quarter and early on in the third quarter may see an easing of the situation before the peak season ramps up in mid-September.

On the return of bellyhold capacity, SGL’s global head of airfreight, David Wystrach, says: “Mid-term on this side of the summer, travel restrictions and uncertainty will continue to limit leisure travel.

“Business travellers will not be back to anywhere close to pre-Covid-times. This will limit number of flights and served port pairs.

“Some routes added to the network may be less cargo friendly, e.g. leisure destinations on transatlantic routes.

“On top of this, the current Omicron [variant] will as well impact crews and pilots and with this further reductions on rotations are to be expected.”

Wystrach is also expecting ongoing labour issues across the market to affect ground handlers, forwarders, airlines and trucking companies.

Hervé Bonis, deputy chief executive, Seafrigo Group, says Omicron and seafreight issues will drive demand in the air: “The overall global environment remains uncertain in the first quarter of 2022 due to the high circulation of the Omicron variant of Covid-19 in most western countries.

“This is already impacting on airfreight capacity, especially regarding the China/Hong Kong trade lanes where stringent rules for pilots are in place.”

He adds: “The biggest challenge is definitely to get back to normal regarding intercontinental travel, which then brings back the belly capacity that is not currently available in the market. I expect belly capacity to increase during second half of 2022.

“Regarding our overall volumes, I consider that we will still face seafreight disorganisation, including port congestion, and this will bring opportunity in terms of airfreight volumes.”

Crane Worldwide Logistics chief executive Keith Winters is another expecting labour issues to affect the market.

“There is no question that we are still expecting some turbulent times ahead,” Winters says.

“Currently, with the resurgence of Covid, new vaccine boosters need to be moved and there is still the possibility of borders closing as countries cope with the influx in cases.

“With blank sailings and the Lunar New Year ahead, it’s expected that the first quarter will create more demand which will continue to add pressure in terms of cost.”

On the return of belly capacity, Winters says this is highly dependent on borders opening up.

“We can be hopeful that the new variant will see the end of the pandemic, but there are still so many unknowns,” he says.

“With new aircraft being lined up for charter flights, there will be options, but for now I think we need to look further afield than 2022 to return to what we consider ‘normal’ bellyhold capacity.”

Airlines are also expecting demand to be tight over the coming year.

Roger Samways, vice president commercial, American Airlines Cargo, says that despite some return of passenger flights, indicators suggest that demand improvements and congestion in other modes will contribute to capacity shortages in air.

“Continued capacity shortages in the market, relative to demand, as well as infrastructure challenges at airports, will present ongoing challenges for the air cargo industry,” says Samways.

“We have faced capacity shortages since the start of the pandemic, but we’ve seen innovative, creative solutions across the industry as carriers have tried to support the needs of our customers.”

Samways adds that belly capacity will improve in 2022 compared with last year but won’t get back to 2019 levels due to changing government travel restrictions and possible future Covid-19 outbreaks.

“Our current expectations are that widebody capacity will grow around 20% compared to 2021. The key for our cargo customers, though, is where that capacity is going to be deployed.

“Unlike in 2021 when many of our widebody aircraft were operating on short-haul leisure markets, such as the Caribbean and Mexico, in 2022 our widebody fleet will primarily be deployed on long-haul international markets which is great news for our cargo customers.”

Charter outlook

Charter brokers are also bracing for another busy year. Dan Morgan-Evans, group cargo director at Air Charter Service (ACS), says the disruption experienced over the last couple of years has been too great to unwind completely during 2022.

“The longer time goes on, the more balanced it will become but we are still seeing very strong demand in the short term and long term, with a record number of forward bookings even into 2023,” he says.

“The whole supply chain has changed over the past two years and, unless we suddenly revert to pre-pandemic passenger numbers and all travel restrictions are lifted, then we will continue to see strong demand.”

He says that ACS was previously used to seeing single ad hoc flight bookings with the occasional programme for multiple flights. Now, the company is seeing bookings that are predominantly programmes.

“The challenges will be similar,” he adds. “Covid restrictions, lack of capacity, bottlenecks at airports – but these are all the benefits of using a company like ACS.

“The marketplace is complicated. Whether that’s the aforementioned, or people out there trying to take advantage with phantom aircraft and fictitious contracts.”

Neil Dursley, Chapman Freeborn chief commercial officer, cargo, says the continued impact of Covid-19 shows little sign of slowing down and there is no return to “business as normal” insight.

“What we are seeing in the first weeks of this year is ‘more of the same’; a distinct lack of widebody availability and supply chain challenges impacting the major ocean ports of the world with new restrictions due to new Covid outbreaks in strategic ocean ports. This continues to force more and more cargo into the air.”

Dursley adds that there has been a surge in demand for Covid test kits. The broker has just completed “an enormous programme of flights” utilising multiple AN-225 and AN-124 flights, including on Christmas day.

“Never before in our history, or I believe in the history of the AN-225, has it ever operated so many back-to-back missions,” Dursley says.

“The good news for our clients is that pricing on widebodies from Asia to Europe, as well as transpacific routes, has reduced in January vs December, but we anticipate that this will again increase following the Chinese New Year.”

He adds that freighter operator Magma Aviation, a Chapman Freeborn Group subsidiary, continues to operate at full capacity to and from a range of origins.

He says: “Restrictions on crew due to Covid outbreaks in key locations is creating issues but ones which our partners are supporting so that supply chain continuity isn’t impacted.”

Looking at sectors driving demand, Dursley says that the company is heavily involved in humanitarian related movements for vaccines, test kits and emergency supplies.

“Likewise we see increases in automotive, hi-tech and oil & gas related activities.

“We have continued long-term programmes of e-commerce related movements using passenger-cargo aircraft as well as full freighters utilising both group assets and many third-party airline partners.

“So this storm rages on and with it we are expanding rapidly and recruiting currently over 100 full time employees to support our clients as well as opening up multiple new offices around the globe.”

Navigating the challenges ahead

With another year of disruption and unpredictability ahead, what steps are companies taking to try and navigate the challenges that lie ahead?

Crane Worldwide Logistics’ Winters says that close collaboration, information sharing and flexibility are key to managing the current market conditions.

“It takes all key members of the supply chain to work closely with clients, manage expectations and find solutions that will work in the long term.

“Supply chains are being reassessed by many organisations and are also at the top of priority lists in 2022.

“There is evidence that companies are reverting to nearshoring, alternative routings, transportation switches etc.

“We believe that working together closely with our clients, we can bring the expertise needed to provide solutions, not only the urgent situations, but also in the long term.”

He says these solutions could be additional charter capacity, extra 3PL warehousing or alternative methods of transportation such as rail freight.

Ravn of DSV says that forwarders will need to invest in their own controlled capacity to add some consistency and longevity for customers that commit to capacity and rates.

“Most air carriers have become transactional during last year and there is an intense battle to secure the best commitments in the market,” he says.

“It puts clients, who have been consistent supporters on particular lanes, in a very [difficult] situation, hence they are turning to forwarders like DSV with own controlled charters to leverage their spend, which is often connected to other parts of the supply chain.”

From an airline perspective, Samways of American says that the airline has learnt to expect the unexpected.

He agrees that collaboration across the supply chain is key to managing the situation.

Samways says: “From an industry perspective, increased investment and closer working relationships with industry partners will be important in helping to ensure that we are able to operate efficiently and accommodate as much cargo is possible.”

He adds: “For American, that has included working with our network planning team to help ensure the rebuilding of our widebody network meets both PAX and cargo needs and looking at how we can best utilise our existing narrowbody and trucking networks to help bridge routes and create more options for customers.”

He adds that the airline has already made plans for nearly all its widebody fleet to be dedicated to long-haul international routes, which is ideal for the cargo division.

The company is also poised to take delivery of more than 40 Boeing 787 aircraft over the next few years, which Samways says will help to support further capacity growth across American’s network.

Wystrach of SGL says that it is important that forwarders remain very proactive and that customers keep a high focus on their approach to planning.

“Keeping up with constant schedule changes, impact of airport/port congestions etc., will require an ongoing agility and solution-driven attitude,” he says.

“This will continuously require flexibility for forwarders and customers in regards to pricing, transit times and routing opportunities.

“Constant proactive communication, including offering multiple solutions enabling our customers to make a conscious decision on how to balance cost and supply chain risk, is and will remain a key priority for us.”

Source: www.aircargonews.com

Image: www.pixibay.com

The post Outlook 2022: Another challenging year for air cargo appeared first on Cargo News Today.

I have previously analyzed the consequences of congestion for cargo ships in the logistics sector. Not only have they significantly reduced the speed of delivery of goods, but they have also increased the cost of services, adversely affecting both suppliers of goods and consumers. In order to continue to work efficiently and reduce waiting times, companies are trying to find other ways to deliver cargo from point A to point B. One of them is by air freight. The strong desire of companies to switch suddenly from sea to air transport has led to an unexpected increase in demand for air freight, which is difficult to meet with current capacity. For example, in 2021, a total of 183,362 tonnes of air cargo were handled at Budapest Ferenc Liszt International Airport, which is 36% more than in 2020.

Does all the blame lie in ship congestion?

It would be foolish to think that the situation was exacerbated only by congestion in cargo ports. Other factors have also made an impact. For example, changing consumer habits. At the beginning of the pandemic, when countries closed their stores for several months to fight the virus, people began to shop online, which led to a sharp increase in demand for goods. Air transport is clearly the fastest way to transport goods between intercontinental routes. Those companies that were initially willing to pay more, knowing that the product will be delivered on time, immediately increased the demand for air transport. Others, on the other hand, preferred maritime transport to save money, but rushed to find available carriers due to congestion.

An increase in demand raises the price

As in any other industry, including logistics, when the interest of service recipients exceeds supply, the price of the service increases with the increase in demand. Until now, this has been the case in maritime freight transport, but it is now slowly beginning to affect the aviation sector as well. It has been observed that air freight rates have remained well above the 2019 price level in recent months due to high demand. WorldACD data show that global rates reached $ 4.57 / kg in the first week of December, compared to $ 4.26 / kg in 2019. (https://cargoworldtoday.com/air-cargo-capacity-climbs-but-rates-remain-high/) Data from the Baltic Exchange Airfreight Index (BAI) show that prices from Hong Kong to North America were at a record high in the same week – 14 , 30 USD per kg compared to the previous week, when the price per kg was only 12.41 USD. IATA data also show that it was three times more expensive to transport three kilograms of goods by cargo plane, for example, in September 2021 than by sea. However, compared to the time before the pandemic, this price was even 12.5 times higher.

It may seem that the increased transport costs make some retailers think twice about switching from sea to air freight, but this is not the case. Many are willing to accept a higher price. Why is it? Because, undeniably, in the intercontinental freight market, air is the fastest way to deliver goods from point A to point B.

Relieving tension by increasing the amount of cargo planes

One of the most effective ways to prevent air freight from entering a crisis with even higher prices is to balance supply with demand. How to do it? Passenger airlines must carefully consider the idea of ​​offering freight services as well. Qatar Airways and the Emirates Group, known to the general public as passenger airlines, have already taken this step in early 2020. Thanks to this decision, both companies earned more than half of their 2020 revenue from air freight. At the beginning of the pandemic, many companies may have moved in the direction of freight, desperately trying to avoid bankruptcy, but this could be a strategic and growth-enhancing decision that would help the company continue to make money in the face of repeated passenger restrictions.

Author: Roland Peterson, logistics expert

Image: www.pexels.com

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