Flying in a turbulent sky of disruptions, air cargo suffers a lack of demand

The demand for air cargo among shippers has been on a steady decline since March this year. Air cargo volumes fell 9% Y-o-Y in July and with the transatlantic capacity increasing, the air freight rates have also been exhibiting a downward trend – though still higher than the pre-pandemic levels. Combined with the Russo-Ukrainian war and the soaring global inflation levels, the numbers in terms of volumes and rates, depict the picture of a turbulent sky for air cargo industry.

The volumes are also being tapered as a result of the shipping industry disruptions slowly easing out to some extent, even though the former ensures high speed delivery of cargo. Chinese Ports have somewhat returned to normal operations, and the congestion on the U.S. West Coast also shrunk in Q2 FY22. With more shippers sticking with ocean transport, the airfreight business saw a considerable Y-o-Y drop in metric tons shipped in Q2.

“Much of our air freight volume is driven by ocean conversions. We’d expect a bit of slowing there as well through the balance of the year,” said Bob Biesterfeld, President and CEO, C.H. Robinson. With more shippers sticking with ocean transport, C.H. Robinson’s international airfreight business saw a 6% YoY drop in metric tons shipped in Q2.

On similar lines, as the customers (shippers) are noticing improved schedule reliability for maritime shipping and oscillating back towards it, DHL Global Forwarding also reported to have suffered a loss of air cargo volumes in Q2.

It should be noted that customers (shippers) have committed to less expensive transport options, like ocean shipping, to reduce the impact of freight costs on their bottom line even with air cargo rates falling. Although airfreight helped speed up deliveries, it wasn’t enough to mitigate supply chain issues elsewhere. 

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