December 17th marks 112 years since the first airplane took flight1. Since then, air has been an essential vessel for people and goods to travel the globe. Similarly, air cargo has been a viable mode of global transportation and has contributed to expanding markets for many shippers.
This year has been challenging for air freight as markets around the world, including many of the largest such as China, Europe, and Japan, have seen slower than normal growth. This slower growth not only puts downward pressure on demand, it also makes it harder to justify the cost which can be more than ten times more expensive than ocean transport.
The State of Air Freight
Although many shippers may be reluctant to take advantage of air freight due to the higher cost, it is clearly beneficial when used under the right circumstances. This past year, companies that shipped goods into the West Coast ports of the United States faced congestion issues which left inventory astray. In response, 2015 began with a higher demand for air freight as shippers wanted to avoid sending their inventory into a stalemate at the ports. As port issues have since been resolved, the initial demand for air freight has subsided.
The remainder of this year has seen a decline in air cargo shipments in comparison to previous years. However, depending on the region and product, air freight is still a strong contender in many shippers’ supply chains. Regions in Africa and the Middle East have seen an increase in air freight volume over the past year2. Overall capacity increased which outpaced the demand globally3. The slowdown in air freight in other regions can be traced back to variables such as China’s shift towards domestic markets and an overall slowing of global trade4.
Goods by the Sky
There are a few products that’ll continue to ship via air regardless of the economy. For instance, luxury items where there is a large enough margin that the extra expense doesn’t make an impact on the shipper’s bottom line. Perishable items also have tendencies to ship via air since timing is important in ensuring the items reach consumers in pristine condition. Another industry that frequents air is medical products where security and condition of the goods are just as important as the timing. As these grow, so does the demand for air freight5.
Air Cargo Conditions
There are also certain instances, like high demand and new product launches, where shippers will take advantage of air freight capabilities. During these times, it’s imperative to have the right amount of inventory and air freight can ensure that goods reach the consumers. Although it can be more expensive, most shippers determine the cost is justified to ensuring demand is met and sales are made.
Network: Utilizing the Open Air
When it comes to optimizing your supply chain, there is no need to choose just one mode of transportation. In fact, utilizing all modes of transportation can help improve sales and customer service. Many shippers work with a 3PL to utilize all modes of transportation and take advantage of their relationships within the industry. 3PL providers can find synergies between different modes of transportation to maximize productivity. For instance, ocean transportation may be appropriate for some scenarios, however; if capacity or demand changes abruptly the right relationships can help make air an expeditious option. The flexibility can make or break a sale in some occurrences.
Air may not be the most used mode of transportation, but many shippers have recognized it as a beneficial component. Like the economy, capacity is affected by many variables. Incorporating air transportation into your logistics network can help meet all your shipping needs under numerous circumstances.