What’s Up with Air Freight – A look back on ‘20 and ahead to ‘21

2020 saw a simultaneous hit to both Air Cargo Demand and Air Cargo Supply.

But Air Cargo Supply was down significantly more than Demand leading to a sharp increase in Air Freight rates.

Why Was That ?

On Many Major Routes between the Americas, China / Asia and the EU, 40% or more of the Capacity was “Belly Space”.

“Belly Space” – what’s that?

That is the space in large “double aisle” Passenger Planes (think 777’s, 787’s, A-350’s, etc.) that is allocated by the Airlines to Freight Forwarders for use in moving goods.

So the Flight you take (maybe “took” is a better word now) from Shanghai to Los Angeles was in part an “air freighter”.

The International Flight Cancellations that have taken place since the Covid-19 Pandemic began, have served to dramatically reduce available capacity on major trade lanes.

So even though Air Freight Demand was Down, it was not down as much as Available Air Freight Capacity … And that led to substantial increases in Air Freight Cost.

So what’s ahead ?

We are all hoping that 2021 will bring a return to something that looks a bit more “normal”.  But before we get to normal we still have a few hurdles to get over.

First … The Vaccines.  Great news for sure, but the hundreds of millions, maybe even billions of doses that will be moved in 2021 require the same thing that other goods do … capacity, and specifically Air Freight capacity.

Vaccine distribution WILL be the Priority for 2021.

This will further impact available air cargo capacity for other goods, leading to sustained high costs.

Additional “country lockdowns” will also impact the already limited amount of international passenger traffic … leading to additional flight reductions.

Put all this together, and what do you get ?  Constrained supply at least through the first half of 2021 and likely through the entire year, as airlines will be careful as to how quickly capacity is added back.

Up next … What should I do as a Shipper to offset the cost impact of air freight ?