Is Air Cargo’s Increased Flexibility A Threat To Shipping Industry?

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  • Shipping items by air is not the least expensive option.
  • Still, air freight popularity has recently been rising because company representatives realize it’s sometimes the most economical option in the long run to reduce shipping costs.
  • Other methods are more expensive than before, and delays are more likely to occur due to port congestion.
  • Here’s a closer look at why many decision-makers realize air cargo is the way to go.

A recent news article published in the Global Trade Mag states that More Brands Are Choosing Air Cargo to Reduce Shipping Costs.

Efforts to Reduce Shipping Costs Align With Other Goals

A vital factor to remember is that logistics leaders have more in mind than shipping costs when they outline their priorities. They understandably want to get goods to their destinations as efficiently as possible but recognize that might mean paying more for air cargo.

A July 2022 article from Financial Times mentioned Levi Strauss, Lululemon Athletica and Gap as some of the fashion brands that have recently relied on air cargo. Some of those businesses spent several million on it, cutting into their profit margins. However, some company leaders deemed the expense worthwhile, especially since other transportation methods are often slower and less reliable.

Those downsides are particularly problematic for industries such as fast fashion, which depend on getting the latest styles quickly and keeping them in stock for eager buyers. The air freight popularity is also easier to justify when the products shipped are essential for business. Brady, a manufacturer of technical and safety equipment, was another company reported to have recently sent some of its critical components by air.

Examples like these illustrate why logistics leaders must weigh shipping prices alongside all other aspects. Going with a lower-priced option might keep things within budget in one regard, but it could make costs balloon elsewhere.

That could happen if the items are delayed too long and are hotly anticipated products that must arrive by specific deadlines. Amazon has guaranteed delivery dates for some products and will refund all shipping costs if they don’t come on time. It’s easy to imagine how much such mishaps would cost if they involve products purchased by thousands of consumers. In those cases, the expenses span beyond the financial into the reputational.

Fewer Unknown Variables Bolster Air Freight Popularity

The people who work hard to ensure items arrive on time have no choice but to remain calm and adaptable when faced with factors outside their control. There’s no way to eliminate those things. However, one advantage of air freight is that it usually enables more predictability than other shipping methods. That’s because there are generally fewer prolonged uncontrollable variables defining what happens to goods sent by air.

Road construction can last for months, resulting in long-term traffic congestion. However, most air cargo-related delays only last for a few hours at most. Even if they occur, the overall impact is less disruptive.

Pilots often have more options for how they handle bad weather, too. Some can fly above storms, mitigating most of the adverse effects. That’s not always the case with sea cargo, where wave swells could result in lost containers. Similarly, truck drivers must often pull over and wait until storms pass.

That said, logistics leaders still must plan for what happens once the flown goods leave the planes that carried them. One expert in the logistics-as-a-service industry said 5 million packages cannot be delivered per day due to a lack of capacity.

Route planning apps, micro-distribution centers and drones are some of the avenues company leaders pursue to get parcels to their destinations. Such solutions will have to help fill in the gaps for now because building more warehouses takes time and financial resources.

Logistics Professionals Can Reduce Shipping Costs With Air Cargo’s Increased Flexibility

A World Bank report examined the potential for air cargo options to help landlocked and developing nations achieve a competitive advantage. It clarified that sending things by air typically costs 12-16 times that of ocean freight. Similarly, the prices are usually four to five times costlier than moving products over land.

However, the analysis cautioned that some things must happen first for the nations in question to maximize the benefits they experience from an increase in air freight. For example, they must enhance airport operations and make it easier for foreign planes to arrive and depart. If that happens, these countries could open new shipping opportunities.

The report explained how some manufacturers will make deals for shorter production timelines if air freight is a transportation option. Air freight also allows supply chain diversification. In some cases, initial orders of products arrive by sea. Then, once it becomes clear the items are in higher-than-expected demand, the replenishments can come by air. Such arrangements can reduce shipping costs by giving logistics professionals more options and flexibility.

Amazon Banking on the Air Cargo Boom

Amazon is among the companies where getting products to customers on time is a top priority. That’s likely one of the reasons for the company’s increased investments in its air cargo division. DePaul University researchers investigated the matter. They confirmed the e-commerce giant has stepped up its flight activity by 14.3% since August 2021.

The company has centered much of its expansion in the European market, thanks in part to its Irish partner, ASL. The collaboration, along with a larger network of planes used by but not registered to the company, allowed Amazon to have at least 38 flights daily in that part of the world. That number was up from eight flights daily in August 2021.

However, there’s good news for the United States market, too, the DePaul University team found. Their data indicated Amazon’s air cargo network is now within 100 miles of where 73% of the U.S. population lives.

The researchers also clarified that the e-commerce giant primarily uses air cargo to move goods between its warehouses and distribution centers. It still needs road transportation to get products to people’s doorsteps. However, Amazon’s increased investments mean company leaders need not worry if the overall air freight popularity wanes. They can control more factors in-house, which could reduce shipping costs.

Even so, Amazon does not yet have an airline operating certificate and still relies heavily on contractors. However, it purchased minority equity stakes in Atlas Air and ATGS, signaling its ongoing commitment to moving products by air when possible.

Will the Air Freight Popularity Last?

It’s too early to say whether the current air freight popularity in the industry will persist in the long term. Much depends on whether prices remain relatively affordable or trend upward. Plus, the extent that people can reduce shipping costs by sending things by air largely depends on the particular items transported and any relevant aspects surrounding those goods.

However, logistics experts should take those things into account. After evaluating such factors, they’ll be in a good position to decide the most appropriate ways to ship products.

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Source: Global Trade Mag

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