It’s no surprise that air freight capacity is tight at this time of year, yet now more than ever air freight is needed to keep supply chains moving along. With rising demand and fewer passenger flights as compared to pre-COVID days, there is simply less available air freight capacity. In addition, airports that are using zero-COVID strategies can shut down at any moment. Last month, for example, China had several airport shutdowns due to COVID cases.

Increasing Demand yet Constrained Capacity

Because shipping demand has been unrelenting, air freight is now used more regularly by companies that have timeframes to meet instead of just using air to handle short-term peaks as they did previously. Since air freight is often more costly than shipping via ocean freight, many shippers only reserved shipping by air for certain situations. However, until international passenger flights resume their normal volume, air cargo freight will continue to be constrained. Passenger planes usually carry about half of all global cargo, but it does not benefit airline companies economically to fly planes with just cargo and only a few passengers.

Another reason for the lack of air freight capacity is due to the ocean transportation situation. Higher freight costs and major shipping delays on the marine side have caused many shippers to switch to air transportation. Air freight is currently significantly faster than ocean freight and has more of a chance that the shipment will arrive at its destination on time.

For August 2021, cargo ton kilometers were 7.7% higher than in pre-pandemic August 2019, yet capacity fell 12.2% for the same time period, according to the International Air Transportation Association (IATA). In addition, August 2021 air cargo rates were 112% higher than pre-COVID levels. Even so, shippers are willing to pay the higher rates for air freight to ensure their goods get to their destination in time, especially over the next few weeks. 

Airport Challenges

In addition to these contributing factors to the lack of capacity, airports themselves have had their share of challenges. Labor shortages and COVID outbreaks have plagued some airports. The hiring process for air freight employees is slow and long, due to the need for credentials. This means that even once employees are hired, they need to wait for clearance to access the airfields. Cargo areas are congested because airport infrastructure is simply not enough to handle the volume that increases year over year.

Even converting passenger planes to carry more cargo has not fully rectified the situation.  Since cargo is usually shipped in pallets, the door to a passenger plane is too small and the boxes must be carried manually, which takes much longer.

What Can Shippers Do

The capacity constraints in the air cargo market will most likely be in effect for the next several months, if not longer.  Shippers need to be able to navigate the air cargo market. 

– Consider New Airports:  Shippers can consider switching from major U.S. airports and move to airports that focus on cargo. Some airports like Chicago Rockford International Airport in Illinois have hubs for major parcel services, faster handling, and fewer planes on the ground. Plus, the airport is located near major highways which helps get shipments to their final destination. Long wait times for delivery and pickup can be avoided by switching airports.

– Consider Different Modes of Transportation: Because there is simply not enough capacity in the supply chain, processing times for freight have been extended. Shippers need to consider all modes of transportation, including air to be able to meet on-time requirements. A TMS (Transportation Management System) will help track all modes of transportation as well as real-time information as to where each shipment is, which is a necessity right now.    

– Increase Communication: Communication is the key to getting shipments to their destination on time. Shippers need to decide what they need and when they need it and communicate that to their freight forwarders and carriers early. Short-term travel restrictions and changes could impact their shipping schedule. 

The air cargo market might remain unpredictable for some time, and capacity will remain tight until passenger planes resume their service to pre-pandemic levels.  Until the capacity situation balances, rates will remain higher as well. Shippers must look for different solutions for their supply chain efficiency. Working with an expert provider like Red Arrow Logistics can help determine what suits your shipping needs best.