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Pandemic continues to fuel freighter demand

Cargo activity at Hong Kong International Airport. (Photo Credit: Shutterstock)

The coronavirus pandemic took a toll on every part of industry, but it has been particularly hard on the air cargo sector. The virus spread across the globe, halting travel and grounding flights. With passenger planes all but out of commission earlier this year – and still lagging considerably in the fourth quarter – shippers had significantly fewer options for moving their products across the world. To complicate matters further, transportation options fell through right as consumer demand for common household goods was picking up. 

By late summer, consumers were exiting their grocery store panic-buying phase and entering into a new one: online shopping to keep themselves comfortable and entertained at home. Instead of toilet paper, consumers set out to score popular video games and upgraded electronics. Demand for passenger flights remained low as people opted to skip summer vacations or take to the open road instead. This meant companies were taxed with moving “nonessential” goods without the help of passenger flights, leading to fierce competition for all-cargo planes. 

The resulting rate spike rocked companies, ratcheting up their expenses while many were still trying to tighten their purse strings to offset any pandemic-fueled losses.  

“Airfreight has been challenging from a cost component because of the amount of cargo that has had to move via air to fulfill obligations for customers. When an influx of cargo needs to move via a specific mode of transportation, cost becomes an issue,” said Larry Betts, Apex Logistics International’s corporate director of ocean, domestic, warehouse and security. “There’s a lot of cargo that would have traveled on passenger flights. When passenger flights were canceled, cargo aircraft became overcapacity and rates skyrocketed.”

Climbing rates are not the only problem shippers face when capacity is tight. The lack of space also leads to shipping delays and, in some cases, the inability to move freight via air at all. As of October, cargo levels remained subdued at major hubs around the world – including airports in Hong Kong, London and Amsterdam. 

All three airports experienced double-digit spikes in freighter movements alongside double-digit drops in passenger traffic. Subdued cargo levels suggest that the increase in freighters did not entirely make up for the lost capacity that accompanied the drop in passenger flights. 

This competitive and volatile market underscores the importance of partnering with an informed and innovative transportation partner to make sure goods make it to their final destinations without demolishing the budget. Betts said it is important for a transportation partner to understand all the different routes and modes of transportation available to customers. In some cases, switching up routes or pivoting to ocean can suit a company’s needs better than sticking to their pre-pandemic norms.

“If you know a customer values price over time sensitivity, you can understand all the moving pieces and help them find the right carriers and modes to get what they are looking for,” Betts said. “You can become a strategic partner for the customer instead of just someone moving their freight.”

That is exactly the kind of service Apex aims to provide their customers – pandemic or no pandemic. Still, the company is acutely aware of the issues customers are facing during the unexpected disruption that accompanies a global health crisis.

“Apex as an organization has demonstrated care and understanding of difficult times that the markets have presented, and everyone has been very boots on the ground when it comes to finding solutions and moving cargo for our customers,” Betts said. 

It is unclear what challenges lie ahead in 2021, but Apex stands ready to tackle whatever comes next. 

Ashley Coker

Ashley is interested in everything that moves, especially trucks and planes. She covers air cargo, trucking and sponsored content. She studied journalism at Middle Tennessee State University and worked as an editor and reporter at two daily newspapers before joining FreightWaves. Ashley spends her free time at the dog park with her beagle, Ruth, or scouring the internet for last minute flight deals.