Air freight has served a vital role in the past several years as global supply chains shrink and adapt. Air freight is shaping up to hold a larger position in the cargo industry than ever before. Here are a few trends that are working to change the future of the air freight industry.
Air Freight as an Omnichannel
Due to high customer demand, airlines are being forced to look beyond traditional services. Because of this, they have turned to other opportunities to provide end-to-end services instead.
The beginnings of this trend can be seen in Europe. Swiss World Cargo has decided to partner with the Swiss Postal Service in order to optimize delivery. In the United States, Amazon has chosen to expand its Amazon Air Services to ensure a seamless end-to-end service.
Trends using omnichannel strategies have begun to take root in the rest of the world. This will continue to open many opportunities for the freight industry. Air freight has a high potential to benefit from using an omnichannel strategy. Taking advantage of these strategies will work to moderate rates and ease competition.
Supply Chain Diversification
As the economy picks up, we will likely see a flurry of activity related to the diversification of supply chains. In particular, we can expect increased activity due to on-shoring and near-shoring. As businesses transfer manufacturing from China to places like Mexico and Canada, regional air traffic is expected to increase.
Businesses transferring manufacturing represents more than just a surge. Regional air cargo shipping will more than likely take hold as an established shipping mode. Supply chain diversification will trigger near-term and mid-term increases in air cargo. Meanwhile, the long-term prospects for air cargo will likely increase as well. This is due to more companies diversifying their supply chains to avoid risk.
E-commerce brings both convenience and speed to consumers as they have the ability to get their products in less than a few days, or even overnight. These same consumers can shop for their favorite products without even leaving their homes. This is all thanks to the e-commerce boom. According to the International Air Transport Association, cargo demands in 2021 exceeded those of 2020. Even more, cargo demands are expected to climb even higher into 2022. E-commerce will continue to shape the air freight industry moving forward because of its speed and ease of availability.
Scarcity of Air Cargo Capacity
Demand for air cargo is high, while available space is decreasing. This is partly due to the ocean freight sector becoming increasingly unreliable due to container shortages and delays. Air cargo carriers are taking several measures for coping with the strong demand for air cargo space.
Air cargo companies are working to expand their capacities which will allow them to make the most of the increased demand. Some companies are converting aircrafts into dedicated cargo planes; others are creating temperature-controlled facilities to house perishable cargo like fresh food and pharmaceuticals. These innovations will go a long way to work toward solving the problem of a scarcity of space.
Rise in Shipping Rates
Shipping rates have been anything but stable since March 2020. As long as the demand for cargo space exceeds supply, we will continue to see a rise in rates. To ease capacity constraints, manufacturers are building more cargo planes and working to retrofit passenger planes. While this is helpful, it takes time and money to manufacture and retrofit these planes. Stable rates will remain elusive for the long term. The uneven opening of economies will also likely further delay the stabilization of rates.
The supply chain industry is transforming as we speak, and so is air cargo. Some of these trends are slower to take effect but will cause lasting changes to the industry. These trends will change business practices as well as the technology behind them, resulting in improved operational effectiveness and efficiencies across the board.