Airfreight forwarders and their customers can expect challenging conditions to continue for the rest of the year and into 2021, including a busy end-of-year peak season and a likely corresponding steep rise in prices, according to senior air freight managers at C.H. Robinson
Outlining what customers can expect from air freight in the coming months, C.H. Robinson highlighted that the airfreight market has been, and will remain, volatile, advising shippers they should expect it to “dynamically change from week to week”, with overall capacity on a year-over-year basis to remain reduced, as carriers continue to limit passenger capacity and retire fleets of older widebody aircraft.
Meanwhile, the US forwarder expects demand for air freight services to “remain strong, due to a combination of increased consumer purchasing, a resurgent need for personal protective equipment (PPE), and scheduled technology launches”, a trend that “will continue with the need to transport vaccines and associated medical devices, placing a heavy demand on air freight services”.
Colin Dunne, US national air freight manager at C.H. Robinson, commented: “After an extremely volatile first half of the year, the challenges in the air freight market look set to continue into 2021, requiring both foresight and planning from businesses.
“With the interrupted schedule being the new normal, and COVID-19 still without a sanctioned vaccine, businesses will need to remain adaptable to the market changes. Businesses need to have flexibility and agility in their supply chain to tackle further challenges arising at short notice.”
He said managing end-to-end supply chain relationships were “crucial to identify efficiencies, as demand planning models adapt to the interruptions; particularly as we anticipate a busy peak season”.
He noted that the air freight market remained “fluid”, with the International Air Transport Association (IATA) recently predicting that international revenue passenger kilometers (RPKs) will not recover to 2019 levels until 2024. “Without the international traveler in the air, the schedule will be less reliable until leisure and business travel return to the skies,” noted Dunne.
“In what was traditionally our lowest period on the air freight calendar, we experienced our busiest period throughout May, June, and July.”
Dunne noted that during the height of the market turbulence in May, during the initial phase of European lockdowns with the closing of some manufacturing, coupled with the increased demand for personal protective equipment (PPE) from China, resulted in the general cargo market becoming a charter market, while passenger restrictions increased. “This caused an overheated market, with the price of air freight increasing by as much as 400%,” although those levels had subsequently normalized.
But he said that if the market “continues with increased demand throughout our traditional peak periods in the lead up to Christmas, the surge in demand may see the rate per kilogram return close to Q2 (second-quarter 2020) levels – particularly as the ocean container market from China (to the US) continues to be congested.”
COVID-19 vaccine factor
Outlining what the logistics of a COVID-19 vaccine may mean for air freight, Dunne noted: “A logistics solution for a vaccine would, without a doubt, need an in-depth detailed plan between government and logistics businesses that could include strict security processes.
We may not be able to predict when a suitable vaccine will be ready; however, we can assume that unless the government can manufacture their supplies domestically, there could be limited supply points.
“The market is predicting that 1,000 charter flights are required to distribute a vaccine to the global population – supplying only one vaccine per person. Similarly, as we witness in Q2, charter flights would likely be prioritized to facilitate the movement of the vaccine, removing capacity from the market and causing potential delays and pricing increases to the general movement of cargo.”