Air Cargo today and tomorrow

Hardly any invention has changed the way we travel and handle cargo as the invention of the airplane did. Planes are faster, and more flexible than ships, making them a valid alternative for the fast, modern logistics environment. Consumer trends like “next day delivery” and the resulting “overnight shipping” are made possible by a worldwide network of airlines, pilots, and airports. More information about the airplane industry and its current importance can be found in the article.

The way freight is handled changed over the years. The main factors creating this change are changing customer preferences and globalization. Before globalization and the globalization of supply-chains products were mostly sourced from one country. Technological advancements made it possible for producers to source from many different countries to reduce costs. New freight transportation methods soon gained relevance. One of these methods was air cargo or air freight.

Air cargo has existed for over 100 years. The first commercial air freight flight took place in 1910 from Dayton to Columbus (Ohio) (Siddiqi, 2020). The flight transported a 200-pound package of silk in a Wright Model B plane. Technology has come a long way since then and new technologies allowed the transportable capacity of air cargo flights to be increased substantially. Just to have a comparison, the largest cargo plane currently in the air is the Ukrainian Antonov An-255 with a freight capacity of 550.000 pounds (Pallini, 2020). This is the 2.750-fold amount of the first cargo flight in 1919. The plane took a critical role in the supply of Europe with Medical supplies from China (Pallini, 2020). Even before the global COVID-19 pandemic air cargo played an important role when it came to logistics. The sector scored growth rates of up to 4.1% in 2018 to 63.7 million metric tons transported (Research and Markets, 2020). The COVID-19 pandemic didn’t spare this sector. Volumes went down 17.6% (YoY) in June and even 20.1% (YoY) in May 2020 (IATA, 2020). With slowly increasing freight volumes the trend is expected to become positive again. Air cargo is the fastest method to transport large freight volumes over a long geographic distance. The key drawback of air cargo is the relatively high costs compared to sea freight or lorries. The sector is just like the others heavily dependent on fuel prices. The volatility of fuel prices during the COVID-19 crisis lead to very high volatility in the entire sector. Many commercial and freight airlines went out of business as a result. Even well-established airlines like the German Lufthansa or United Airlines suffered massive financial losses.

If you and your company want to master the current crisis contact an OCCON consultant today. Our well-versed consultants with wide industry experience can help you turn this crisis into an opportunity. Understanding the market and its dynamics will become incredibly important. OCCON’s consulting and software solutions will help you revise your strategy under the current global logistics and procurement circumstances.

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