In October 2021, the IATA (International Air Transport Association) released their data for global air cargo markets. This showed a positive correlation between demand and capacity constraints. We wrote a blog post entitled, ‘How Has Air cargo Capacity Demand Changed in 2021’ which discussed the apparent rise in global trade since global closures put a halt to much movement throughout 2020. And, from the results published recently, we can see that there continues to be a boost within this sector.
2020/21 Challenges for Air Freight
In line with global closures, the air freight industry saw the same lull in activity during the beginning of 2020 as many industries. Factory closures, country restrictions and a lack of staff grounded the majority of international planes, causing significant delays and backlog. As restrictions eased in waves throughout the year, a spike in growth could be seen. Most comparisons made for 2021 are in comparison with 2019 – the last year of normally predicted demand. However, a spike of 9.4% in global demand in October 2021 shows that importers are finding unique ways to work with the current supply chain issues.
What Is Causing the Increase in Demand?
One of the key reasons why air cargo is seeing such a surge in comparison to other transportation methods is speed. The current supply chain issues impacting global trade are causing massive delays – some upwards of 6+ months. In a bid to work around these and speed up shipments, manufacturers are switching from ocean freight (generally deemed to be cheaper) to air to recover the time lost during production. Equally, because ocean freight has soared in price due to a lack of supply with containers, shipping by air has now become only 3x more expensive in comparison with 12.4x more in previous years.
While this is all seemingly positive news for the industry, there are several challenges ahead. While capacity restrictions have eased somewhat over the months, the increase in demand is working in contrast with them. Air cargo businesses are having to restrict their capacity to absorb this additional demand, increasing the likelihood of backlog and bottlenecks which could slow down global recovery in the wake of the pandemic.
Navigating the ever-changing world of international freight movement can be challenging. This is why our experienced and specialist team here at Radius Warehouse & Logistics is here to help. If you have any questions about air freight and whether it’s the right option for your business in this present situation, please do get in contact with us here today.