Global Trade • March/April 2022 • LOOKING UP

Robust demand for air cargo is expected to continue as global economies prosper, other transportation modes deal with ongoing capacity issues, and consumers around the world step up their spending.

According to the International Air Transport Association (IATA), demand for air cargo rose by 7.9% in 2021 (compared to 2019’s levels) and is on track to grow by another 13.2% during the coming year.

“The air cargo business is performing well, and domestic travel will [attain] near pre-crisis levels in 2022,” states IATA, noting that cargo demand (in cargo ton-kilometers or CTK) continues to be strong as companies continue to restock.

With the World Trade Organization (WTO) forecasting world trade to grow at 9.5% in 2021 and 5.6% in 2022, this momentum is likely to continue.

Measured on cargo weight alone, air cargo moved by airlines this year will reach 73 million tons, up from 68 million tons in 2019, FreightWaves reports.

Next year, 76.3 million tons of merchandise, materials, equipment and food products will be shipped by air. More available capacity is the reason rates, and by extension revenue and yields, are expected to taper off despite the growth in volume.

FACING NEW CHALLENGES

With other modes of transportation having presented new challenges for shippers in 2021—and with the ongoing, pandemic-driven supply chain disruption continuing to impact transportation networks—companies turned to air freight for helping moving their cargo from point A to point B. At a time when fewer passenger airlines were operating (and thus, not carrying as much air cargo), this placed new constraints on a transportation mode often reserved for urgent, higher-value shipments.

Now, The Loadstar says there may be a surge in cargo volumes on the transatlantic air freight trade as U.S. authorities lift the ban on travelers from Europe and carriers introduce more belly-hold capacity on passenger aircraft.

“I expect to see more capacity come in and it looks like strong demand for December, and strong consumer demand in North America will benefit the air cargo business,” IATA’s Willie Walsh told The Loadstar.

On a positive note, American Airlines Cargo recently increased capacity after announcing new services between Heathrow and nine U.S. destinations, the publication adds. The airline is also introducing a special limited-time service between Frankfurt and Charlotte, to “connect Germany to the important production and consumption centers in the US Southeast.”

WHAT’S AHEAD?

Looking ahead, The Loadstar reports that while air freight is better placed to avoid congestion during the coming months than sea freight is, airports have expressed concern that labor shortages could slow down handling.

“Shippers are turning to air freight because of the challenges at sea,” Atlas Air’s Michael Steen told the publication. “It is compounding the high demand already there.”

Steen adds that COVID-19 restrictions, handling and labor protection procedures are putting pressure on supply chains, and that more demand will create delays and backlogs—while the bottlenecks in air freight are “less cumbersome than those in ocean.”

MANAGING DURING TIMES OF UNCERTAINTY

In a recent interview with Logistics Matters, Asok Kumar, DB Schenker’s head of Global Air Freight, was asked to outline the most critical issues facing the air freight business and to share some insights about what lies ahead in 2022. Kumar pointed to the lack of capacity as one of the biggest challenges that will likely carry into the new year, noting that there are only “so many freighters available” to manage the current surge in demand for air freight.

The ongoing COVID-19 pandemic is also impacting workforce capacity across warehousing, ground handling and ramp staffing, all of which are interdependent and play a crucial role in the air freight industry. In some cases, just 40%-50% of the workforce is on duty—entirely too low to manage the onslaught of incoming and outgoing cargo at airports.

To manage customers’ expectations and transport cargo, DB Schenker has established a network of 54 weekly charter cargo flights connecting Asia, America and Europe, and also continually seeks out alternative airports to fly to and from.

Looking ahead, Kumar expects strong demand for air freight to continue throughout 2022, with a possible return to “normalcy” beginning to emerge in 2023, followed by a “return to pre-COVID normality in 2024.”

DB Schenker Executive Vice President Christoph Hemmann is head of Airfreight Americas Region. His article originally appeared on DB Schenker’s Now That’s Logistics news site. Look for more trending topics at nowthatslogistics.com.