Air freight has been revolutionary since its inception, facilitating faster supply chains than ever before. But the wide-reaching power of this industry also makes it vulnerable to disruptions. When Covid-19 turned the entire supply chain on its head, air transport also faced unprecedented obstacles—becoming one of the hardest hit by pandemic shutdowns.
With 50% of all air cargo transported on passenger carriers, global flight cancellations caused by the pandemic represented a devastating blow to the industry. In the first half of 2020, flight shutdowns caused an astounding 55% drop in revenue—setting airlines back an estimated 16 years. However, the flight cancellations affected the air cargo sector very differently.
As freight capacity on passenger flights decreased, capacity on designated air cargo carriers became more valuable. The result? Rather than face the same profit losses, freight rates soared, causing air cargo revenues to rise by 27%.
In the aftermath of these shocks, faced with additional disruptions, every component of the air freight market needed to evolve. Today, carriers and shippers alike are facing new challenges and discovering innovative ways to streamline logistics and harness the efficiencies of air travel.
1. Lingering labor shortages
From pilots to flight attendants, labor shortages have disrupted airlines worldwide, prompting hundreds of flight cancellations even as pandemic shutdowns are lifted. In the summer of 2022 alone, British Airways announced it was canceling over 10,000 flights—primarily due to staffing shortages.
A crucial lack of skilled employees is the root of this labor crisis. Covid-19 slowdowns prompted skilled employees to vacate the industry, and they haven’t returned. The hiring, training, and accreditation process can take six months, creating a significant challenge to fill the gap, according to Monika Mejstrikova, Director of Ground Operations with the International Air Transport Association (IATA).
Mejstrikova believes carriers can adapt to the labor crisis by using competency assessments and online training to speed up the onboarding process, allowing airlines to more quickly fill empty positions and prevent further cancellations.
2. Limited carrier capacity
Though the world is recovering from the pandemic, carrier capacity remains a pressing issue in the air freight industry. Just as Covid-19 forced businesses worldwide to close their doors, the health crisis caused the closure of airline carriers large and small.
Many US carriers made it out of this period without going under, thanks to the effects of a $54 billion government bailout and a $25 million low-cost loans program. But for airlines scattered across the globe, the reality was grim. Many had to exit the market.
With fewer airlines operating and passenger flights not back at normal levels, air cargo has been operating at a 10% capacity deficit as of the spring of 2022. For shippers, low air freight capacity means continued higher freight rates—increasing supply chain costs and lowering already razor-sharp margins.
To cope, shippers must be agile. In these challenging times, the ability to adapt shipping modes at a moment’s notice can mean the difference between a profit and a loss. When switching to ocean freight could avoid costly delays, a transportation management system (TMS) can automate these changes and organize a vast carrier network.
3. Major regional roadblocks
In the wake of the Covid-19 pandemic, the recent Ukrainian war has thrown the aviation industry into further chaos. In addition to putting more upward pressure on freight prices, the conflict has spurred aviation sanctions. European air carriers are now prohibited from traveling in Russian air space.
These sanctions have significantly disrupted air transport between European and East Asian markets. According to Logistics Management, European carriers could find 1.5 to 2.5 hours added to their journeys to East Asia—though carriers in the Middle East may benefit from the change. Middle Eastern carriers could increase revenues as the region becomes an alternative route between Europe and East Asia.
As shippers manage global supply chains, particularly along the Europe-Asia trade route, these considerations can help anticipate delays and perform flexible pivots.
4. Widespread digital transformation
The industry’s digital transformation is one spot of light in the future of air freight. Digitization offers a way to incorporate new cost-saving efficiencies during these challenging times.
According to BCG, digital booking systems are rising in popularity among air freight carriers—allowing faster transactions in the B2B marketplace. In addition, carriers are finding that revenue management systems help carriers engage in dynamic pricing and catch up to pre-pandemic profits.
However, these technological leaps come with risks—from cyber security breaches to data storage issues. As carriers and shippers move forward into a tech-forward future, they must be ready to face and mitigate these challenges before they present more severe threats.
Meeting air freight carriers where they are
The past few years have been challenging for everyone in the transportation sector—suppliers, vendors, manufacturers, and carriers across each shipping mode. Though none of the players have escaped the impact of these unforeseen obstacles, Honeybee TMS by CTSI-Global helps shippers limit their losses as they navigate carrier relationships and prepare to scale.
Honeybee TMS can automate logistics workflows and provide critical data about international supply lines. From managing an expansive carrier network to providing oversight into all air freight shipments, this powerful logistics tech facilitates a smooth digital transformation.
Harness innovative technology to combat new air freight challenges. Contact us today.