With demand for airfreight capacity on track to return to 2019 levels at some point in 2021, the industry is bracing itself for a massive, worldwide vaccine distribution program while also preparing to manage the uptick in business as economies worldwide shake off the impacts of the global pandemic.
According to IATA’s most recent forecast, improved business confidence and the crucial role that air cargo should play in vaccine distribution is expected to boost cargo volumes to 61.2 million tonnes in 2021, just lower than the 61.3 million tonnes it carried in 2019.
“Cargo is performing better than the passenger business,” IATA’s Alexandre de Juniac told Air Cargo News. “It could not, however, make up for the fall in passenger revenue. But it has become a significantly larger part of airline revenues and cargo revenues are making it possible for airlines to sustain their skeleton international network.”
Protect Your Space
As 2021 approaches, Asok Kumar, Executive Vice-President and DB Schenker’s Head of Airfreight, Region Americas, tells shippers to “learn from the lessons of the past” when planning out their airfreight strategies for the year ahead.
“Quite a few industry analysts are predicting a busy year ahead,” says Kumar, who expects capacity to remain fairly tight and costs to continue rising.” With the possibility of more shutdowns coming to help stem the latest wave of COVID-19 outbreaks, Kumar says 2021 could very well be similar in nature to 2020.
“Be prepared for continued rate escalations and tight airfreight capacity,” he warns. “To offset these challenges, shippers should plan in advance with their respective logistics providers, make capacity commitments, and protect their space in advance.”
Worldwide Vaccine Distribution
The biggest differentiation point between 2020 and 2021 could be the COVID-19 vaccine and the massive effort that will go into distributing it to individuals around the globe. With at least one vaccine requiring extremely cold storage conditions, the race is on to secure both capacity and dry ice in advance of the actual distribution effort.
“We’re at a point now where it’s not ‘if’ we’ll get a vaccine, but ‘when’ it will become available,” says Kumar, who expects this momentous event to take even more capacity out of the airfreight market. This, in turn, will likely drive up freight rates and make it more difficult for individual shippers to secure capacity for their goods.
“With all of these different factors in play,” says Kumar, “it’s already becoming clear that airfreight capacity will continue to be in big demand in 2021.”
Plan in Advance
To shippers that are anticipating the New Year and firming up their transportation plans now, Kumar advises aligning with a reliable logistics partner that can secure capacity well in advance.
“Like us, I’m sure all other logistics providers have learned from lessons of the past year; we’re all making capacity plans for next year,” he points out. “If you work to secure capacity with the providers now, you’ll be in a much more favorable position than someone who suddenly out of the blue is trying to look for capacity in a tight market.”
With no end in sight for the airfreight capacity crunch and related rate hikes, Kumar says that any return to “normal” won’t likely take place until at least the first quarter of 2022. “Even that’s optimistic,” he adds. “Particularly because of the COVID-19 vaccine, we’re all going to be pretty busy mobilizing that effort.”