Why more and more products are transported by plane and how freight rates will change in the future
Last summer, when the maritime supply crisis worsened, a cargo plane in Italy was quickly filled with thousands of lipsticks. They were headed to the United States on a tight deadline.
Mehir Sethi, CEO and founder of California-based beauty brand True+Luscious, says she relied on shipping for years . It had always been reliable.
But to get there 15.000 lipsticks to their customers on time, their only option was to pay to ship them by air.
“With great pain for me, we had to do it for two urgent shipments; they were products that were already committed to the retailers”, she says.
The lipsticks arrived by plane with a small loss for the business, but she says it was worth keeping the customers.
Mehir Sethi had to lose money to make sure orders were filled.
Companies took thousands decisions like this in recent months. And there is no sign of that it is going to change yet.
“We have used a lot of air transport, which is not exciting, but it is necessary with the challenges we all face,” explained David Bergman, financial director of the sportswear brand Under Armor, in a business conference call in November.
Eastman Chemical Company similarly reported using air freight to ship specialty plastics.
Higher costs
A service of the US Census Bureau called USA Trade Online, which tracks cargo flows inside and outside the country, indicates that in the first 10 months of 2021, 78.9 tons of auto parts were shipped by air from Asia to that countryís, a staggering increase from 3.000 tons shipped during the same period of 2020.
Shipping goods by air has always been expensive. But now it’s more expensive than ever.
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Air freight costs from Asia to North America “have reached levels never seen before, US$35 by kilo, which is unbelievably high,” says Greg Knowler, Senior Europe Editor at the Journal. of Commerce of IHS Markit.
Delays affecting maritime transport are partly to blame, but also the huge drop in passenger flights since the start of the pandemic.
Rise in demand
More than half of all air cargo in the world generally travels in the hold of aircraft of pa sajeros. But with much less space available, airlines made an effort to convert passenger planes in freighters and recover older models in disuse.
AirBridgeCargo Airlines, a subsidiary of Russian air cargo specialist Volga-Dnepr, is boosting its fleet with six additional planes, after Alexey Zotov, chief commercial officer, says that it was a “high season that we had never had before”.
Delays at the airports “accumulated like a snowball since the beginning of autumn”, he adds.
What products are in short supply in the world (and what is the situation in Latin America)
Some airlines, such as Air Canada, also put cargo planes into service earlier than planned, even before could finish painting them in some cases.
Manufacturers, including Airbus, were inundated with requests to convert old aircraft of passengers to carry more cargo, just to get extra capacity in the skies. Process includes removing passenger seats and installing larger doors.
Orders for Airbus airliners converted to cargo have sold out for the next two to three years, says Crawford Hamilton.
“We see a lot of people buying these conversions, they sold out for the next two or three years”, says Crawford Hamilton, head of freighter marketing at Airbus.
“That is something that we were not in a position to say two years ago”, he adds.
Surplus in the future?
Although air freight transport only represents approximately 1% of the entire freight market in terms of volume, its value is el 12% of the total.
A Sometimes expensive products like consumer electronics and toiletries that have a short shelf life on the market are shipped by air. In addition, during the pandemic, planes have carried countless loads of vaccines and personal protective equipment.
Airbus also launched , a new air cargo service using its fleet of five BelugaST aircraft, also known as flying whales thanks to their huge fuselage.
“I have never seen anything like this”: the great shortage of products that affects the world (and why a “bullwhip effect” can occur)
The question is whether the demand for air cargo will remain strong, even if the pandemic recedes.
With many aircraft permanently converted to transport cargo and the supply of this type of freight rising, Robert Mayer –Cranfield University – wonders if will á too much capacity on the market within five years.
Airbus has just launched the A350F to meet anticipated demand from freight forwarding companies.
However, manufacturers of airplanes seem confident. Airbus expects an increase in demand for dedicated cargo aircraft in the coming years, and has just launched the A aircraft F anticipating it.
It can carry as much cargo, in terms of volume, as a Boeing 747, but it is 40% more fuel efficient. This is achieved in part through the use of lighter materials, composites and titanium in the body of the aircraft.
Boeing is also optimistic. Forecasts the number of air freighters to grow globally 12% from here to 2039. If that projection is confirmed, manufacturers will have to build 2.400 new freighters by then.
“The scarcity we are experiencing is only a warning of what is to come if we fail to change the economic model”
Tom Sanderson, Director of Product Marketing Boeing says it could introduce a cargo variant of its latest wide-body airliner, the 777X, but “several years” will have to pass before it enters service.
Sustainable development and environment
More cargo may be moved by air in the coming years, but that could lead to an increase from greenhouse gas emissions, unless aviation becomes greener.
Both Boeing and Airbus are testing “sustainable aviation fuels”, including uids biofuels from renewable sources that can be used in existing aircraft instead of fossil fuel-based propellants.
DHL commissioned 12 electric planes to Eviation.
It is also likely that small electric planes will become more common. DHL Express requested all-electric planes to Eviation, for example.
Besides the prohibitive cost, one thing that discourages Sethi from using air freight more often to transport her beauty products is the environmental impact.
“I would definitely be annoyed at the increase in our carbon footprint as a company if we had to rely on air travel,” he says.
Like many others, it is reconsidering its dependence on global supply chains. Consequently, he decided to source some of his products from closer suppliers, to avoid future shipping problems.
“Some of the orders we used to place with our Italian manufacturer will now go to our New Jersey manufacturer,” she says.
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