After over a year of stagnant to moderate business, we may be seeing a return to regularity for air freight similar to pre Covid-19 levels. Associations such as the International Air Transport Association (IATA) and the Association of Asia Pacific Airlines (AAPA) both had positive outlooks for 2021. The IATA has noted that in January of 2021 the demand for air freight was still 3.2% lower compared to January 2019. This is before the coronavirus was announced as a global health emergency.
Despite this, the 3.2% was still higher than the 4.0% decrease in air cargo demand in December 2020, showing a small increase. It was also reported that Asia-Pacific region’s internal load factor in January 2021 was 74%. This is a positive sign meaning that air freight is returning to high levels of demand for that region.
How does the ocean freight market affect this?
In late 2020, port congestion occurred in numerous of ports across the U.S. Particularly in the west coast. Freight shipments were backed up for days and even weeks. The cause of this is the sudden surge in e-commerce due to the pandemic. With stores being temporarily closed and restrictions being put in place, online purchase became the easier alternative. The issue arises from the overwhelming amount of e-commerce purchases.
When goods are purchased online, they may be brought in internationally. The freight that was imported into the U.S. exceeded expectation and caused congestion in ports across the nation. Companies started to move their freight by air to combat the delays. Different aircraft manufactures adapted and released planes solely for air cargo. In turn, the market for air cargo has managed to stay afloat and still growing today. Despite the pandemic inhibiting business for aircraft manufactures, a new lane arose where profit could be made.
Will Transportation fees move up?
As previously mentioned, the demand for air freight has seen a steady increase compared to Mid-2020. Comparatively, the freight capacity has not yet grown to meet the demand due to the regulations still in place in the industry. Air freight companies have took advantage of this and hiked up their rates in response. With how volatile the market is at the moment; it may be too early to tell what the future holds in terms of pricing.
Boeing to produce more planes.
The positive forecast for the air freight industry extends far past 2021 for many companies. In response to the demand, Boeing stated that during the next 2 decades, over 4000 airplanes will be made for the Southeast Asia region. This is part of the 40000 new airplanes that Boeing projects on needing over the next 2 decades. This includes the 2000+ airplanes that Boeing projects will be needed for the cargo industry.
If you are looking for a freight forwarding company to assist with your supply chain needs, do not hesitate to call us at 305-821-8995. We assist with air and ocean freight for both imports and exports.