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Home Shipping & Logistics Air Freight

The Critical Role That Airfreight Plays in Global Supply Chains

For over 100 years, air cargo has played an important role in getting high-value and time-sensitive shipments from point A to point B as quickly as possible.

October 19, 2020
The Critical Role That Airfreight Plays in Global Supply Chains
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This post is also available in: Spanish Portuguese (Brazil)

From the minute the world’s first cargo flight left the ground in 1910, airfreight has been playing a critical role in transporting high-value and time-sensitive goods both domestically and internationally.

Most recently, airfreight has proven itself to be a critical “connector” between manufacturers and the people who need their essential goods. In the midst of a global pandemic, shipments that would have simply taken too long to get from point A to point B during this critical moment in the world’s history were transported quickly via air.

“Since the COVID-19 crisis began, air cargo has been a vital partner in delivering much-needed medicines, medical equipment (including spare parts/repair components), and in keeping global supply chains functioning for the most time-sensitive materials,” IATA points out. “This has been done through dedicated cargo freighter operations, utilization of cargo capacity in passenger aircraft, and relief flights to affected areas.”

 

Did You Know?

Within any given 24-hour period, the world’s air cargo providers:

  • Transport over 20 million parcels
  • Utilize over 100,000 planes
  • Ship $18.6 billion cargo

Worldwide, airfreight is used to transport $6 trillion in goods annually, according to IATA.

That represents 35% of all global trade by value, but less than 1% of trade by volume. This imbalance between volume and value is due to the fact that most products shipped via air have a high value attached to them.

 

Airfreight Rebounds

Since COVID-19 emerged, WorldACD says that the nature of air cargo developments has changed dramatically. Providing a picture of the first half of the year, the firm says that worldwide volume YoY (year-on-year) contracted by more than 18% during the first half of 2020, but revenue increased by almost 21%. “Looking at month-on-month (MoM) developments from May to June, we saw worldwide volumes increase by almost 3.5%,” WorldACD points out.

According to its most recent report, the Bureau of Transportation Statistics (BTS) says U.S. airlines carried 4.7% more domestic cargo by weight in May 2020 than in May 2019, the largest annual gain since July 2019 while the 8.4% decline in international cargo was the smallest annual loss since February.

The 15 airlines reporting the data carry more than 95% of the total cargo by weight on U.S. airlines, BTS says, noting that cargo data consists of freight and mail carried within the U.S. and between the U.S. and foreign points.

Here are the air cargo numbers for the top 15 U.S. carriers:

  • Total: 1,532 thousand tons, up 1.2% from May 2019 (1,514T tons)
  • Domestic: 1,163 thousand tons, up 4.7% from May 2019 (1,111T tons)
  • International: 403 thousand tons, down 8.4% from May 2019 (369T tons)

“May would be the first month since December 2019 that U.S. airlines carried more total cargo than they did during the same month of the previous year,” BTS adds. “The 1.2% preliminary increase from May 2019, driven by the 4.7% increase in domestic cargo, was the second year-to-year rise in the last nine months.”

 

Delivery Speed Counts

With customers demanding faster and faster delivery times, more companies are exploring airfreight as a transportation mode. Same-day and next-day deliveries are becoming more and more common, and the next competitor is just a screen tap or mouse click away. Knowing this, organizations are working with their freight forwarders to incorporate more timely air shipments into their supply chains.

“The high value of some shipments, and their vulnerability to theft and counterfeiting, explain why high value goods ship air,” ARC Advisory Group’s Steve Banker points out in Forbes. “But it is not just valuable goods that go via air. Perishable goods, critical spare parts, and fast product lifecycle goods also tend to ship air.”

As the world continues to grapple with the impacts of COVID-19, expect airfreight to play an increasingly important role in keeping global supply chains running smoothly. McKinsey & Co.’s most recent analysis suggests that air freight volumes will continue to increase by an average of about 3 percent annually at least until 2025 and most likely until 2030.

 

 

 

 

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