Due to the current market situation, there is a strong increase in rates as well as a capacity bottleneck. Here you can find out everything about the background.
It only takes one glance up at the skies to notice that they have been decidedly less busy over the past months — and still remain very quiet. To start off with the figures: When compared to 2019, only about one third of all flights took place in 2020. And 2021 has thus far not brought significant improvements.
The COVID-19 crisis as the trigger
To better understand the reasons behind the current situation, it’s worth taking a look at last year: Lots of flights were cancelled in an effort to stop the spread of COVID-19. Since goods are not solely transported on cargo aircrafts, but also by passenger aircrafts as belly freight, the decrease in passenger traffic resulted in a sharp drop in capacity that could not and still cannot be compensated for by the use of freight-only aircrafts. This led to a sharp increase in air freight rates, with the goods to be transported increasingly remaining in warehouses, or transit times being extended. Priority was given to shipments of PPE (Personal Protective Equipment) that were urgently needed to protect the health of all of us.
As a result of the sharp drop in demand for travel, airlines have had to make the decision to withdraw aircrafts from operational service in the short term, park them up in the desert for extended periods, or even decommission them in order to reduce high running costs.
This, notwithstanding the fact that air transport is essential for transporting goods. We are increasingly seeing smaller but more frequent orders, always adapted to the current order situation in the manufacturing industry. Air freight is also indispensable for fresh products, such as food, medicines, and other perishable goods. The reduced availability of containers and ‘blank sailings’ in ocean freight has led to goods having to be sent by air in order to maintain international trade — a situation that is still ongoing.
To counteract the global capacity bottleneck, airlines have temporarily converted disused passenger aircrafts into cargo planes by removing the seats. This is frequently the simplest, quickest, and most reasonable option, as opposed to recommissioning the aircrafts that have been parked on the ground for the long term. When aircrafts spend more than 30 days on the ground, they require a large number of technical tests, including the replacement of safety-relevant electrical components, which involves a great deal of effort in addition to the associated high costs. When an aircraft is parked in the desert, it may not even be worthwhile bringing it back into operation.
The measures taken by airlines are greatly contributing to the easing of the capacity bottleneck. By providing our own flights and our own continually expanding roadfeeder network, we ensure a particularly reliable, high-level availability of capacity for our customers. Despite the positive development of demand in the air freight sector, it will still take a long time for it to fully recover and for rates to stabilise again. Nevertheless, it is difficult to estimate how long the crisis will last since it depends on the current and unpredictable developments with the coronavirus. Another decisive question is when travel will become possible again and how carriers will get through the prolonged crisis.
If you have any questions relating to the current situation, the outlook, or our products, please get in touch with us at any time.