The pandemic has changed the landscape of the entire freight market, which is even more pronounced in the air freight sector. Air cargo, which was previously considered to have a small market share, has been re-emphasized by airlines. Freight forwarders are not far behind the market, leasing freighters to provide better service.
Well-known freight forwarding company GEODIS leased aircraft to operate and expand charter services
Geodis, an international freight forwarder we all know, is leasing freighters with other large freight forwarders because shippers want to rely on air freight to ensure high timeliness and quality service in the face of a messy maritime market.
Previously, GEODIS had been leasing an A330-300 aircraft for many years. Due to the impact of the epidemic, the aircraft was grounded by AirAsia last year and later converted into a cargo aircraft. Titan Airways operates the freighter for GEODIS.
At the same time as the news broke, retailers and other shippers said that their spending on air freight had increased significantly. For example, children's clothing retailer Carter Inc recently said that the company is budgeting for air freight spending for the coming years due to production delays.
(Source: theloadstar)
VF Corp Group, which owns apparel brands such as Vans and North Face, said it would spend an additional $35 million on air freight this year due to another outbreak in Vietnam and production delays, compared to $25 million more than the original budget
GEODIS's air freighters are scheduled to fly between Amsterdam, London, Chicago and Hong Kong starting in September, flying between Amsterdam/London Stansted and Chicago's O'Hare three times a week. With the arrival of the peak period, they will also rotate weekly flights between Amsterdam and Hong Kong, and will provide charter services to customers.
Marie-Christine Lombard, CEO of GEODIS, said: "Due to the continued strain on air freight capacity, we want to provide our customers with long-term guaranteed air freight services, so we are investing in our own first dedicated freighter. ”
Eric Martin-Neuville, executive vice president of GEODIS' freight forwarding division, said geodiss's direct air freight service has provided approximately 650 charter cargo services to date.
"The experience gained from these jobs prompted us to make up our minds to charter our own aircraft. This will provide our customers with reliable flight schedules and help them overcome the ongoing logistical constraints of the market. ”
However, as mentioned in our previous article "The Airport Cargo Is Seriously Piled Up, Freight Forwarders Have No Choice but to Plan "Robbery Pick-up"...", Chicago's O'Hare Airport is facing severe congestion, limited by the airport's ability to handle cargo, and the charter initiative can play a very limited role. In order to receive the goods on time, the shipper will likely still have to pay more in other areas.
Airlines' Long-Term Neglect of Cargo "Education" by the Pandemic
The director-general of the International Air Transport Association acknowledged on Monday that the aviation industry has historically placed less emphasis on cargo. But the pandemic has taught airline executives a lesson: It's profitable to focus more on cargo services.
"People may not yet fully realize the importance of cargo to the financial situation of many airlines." Speaking at a meeting in Miami by CNS, Willie Walsh, former chief executive of British Airways and The International Airlines Group, said.
"When it comes to council discussions, to be honest, there is very little discussion about freight. Freight is rarely put on the agenda. Walsh, who took the helm of IATA in April, said. Geneva-based IATA has many priority issues to address, and freight has long been a major topic of discussion. "So I think the criticism of IATA is justified."
(Source: aviationiran.com)
After the outbreak of the new crown virus, protective equipment, vaccines and other important supplies were transported by air cargo aircraft, and air freight became one of the saviors of the world. Also affected by the epidemic, most passenger flights around the world have been grounded (the proportion of cargo carried in the belly of passenger aircraft accounts for about 50% of air cargo). In this situation, air capacity tends to be tight, and passenger airlines have carried out "passenger to cargo" and deployed about 2,500 aircraft for pure cargo business. This has alleviated the tight capacity of air freight to a certain extent.
Air capacity is still 15% lower than before the pandemic
However, due to the strong demand for cross-border e-commerce, air cargo capacity is still about 15% lower than before the epidemic. The shortage of capacity has driven prices to rise, so in recent quarters, many airlines have hit record revenues and are still enjoying very high revenues. Cargo has quickly become an important source of revenue for cash-strapped airlines.
Cargo airline revenue will account for 35% in 2020, compared to about 13% previously. IATA predicts that although the epidemic has been effectively controlled in more and more countries and more passenger transport businesses are returning, freight will still generate 30% of the industry's revenue in 2021. Walsh said that because of the profitability of cargo, airlines will pay more attention to cargo in the future.
In fact, some airlines have shifted their service models. At Delta Air Lines (DAL), for example, the cargo department plays a larger role in determining the cities the airline serves, the frequency of service and the type of flight. Robert Walpole, vice president of cargo, said in an interview earlier this summer: "I have always recognized the contribution of cargo, but not all airline CEOs have, but this has changed during the epidemic and the team of airline managers has re-recognized the importance of cargo to the business. ”
(Source: chinatimes.net.cn)
In fact, airlines such as Air Canada, WestJet, SmartLynx and Air Belgium have established (or are in the process of establishing) separate all-cargo divisions.
The IATA director general predicted that airlines' focus on cargo would continue, even hinting that many airlines would buy more cargo planes.
Favorable conditions support the continued growth of air freight volumes. The situation in North America is very typical, freight economist Walter Kemmsies noted in a report that sales in the retail sector have accelerated during the pandemic to levels that could not be predicted before 2026. But inventory levels are at low levels, and many retailers are relying on air freight. Because air freight allows them to hold the goods as soon as possible and then dump them, they do not waste today's good market.
Correspondingly, domestic producers are also eager to export the goods produced to the North American market, which has led to a very strong demand for domestic air freight. Combined with the current strict epidemic prevention policy in China, considering that the impact of the cargo shutdown at Pudong Airport may not be a one-time occurrence, I think the recent air transport capacity will still be in a state of tension, and the freight rate may not be reduced for the time being.