Supply Chain Council of European Union | Scceu.org
Freight

Air freight takes off as companies try to dodge supply chain pain

Retailer Next warned earlier this month that the cost of flying freight was eating into its margins. Last week, stuffed toy giant Ty said it had spent $225m flying Beanie Babies in from China as it tried to avoid gridlocked ports, booking up hundreds of flights at $1.5m to $2m a pop.

“We’ve seen a big shift towards retail,” says Morgan-Evans, who says his company recently flew the Antonov 225, the world’s largest cargo aircraft, from China to Ireland three times, carrying products for retailers including fake Christmas trees.

The sector’s strength has not gone unnoticed. Carriers’ cargo revenues have risen from about 10pc to 15pc of their total to about a third and want to ensure they keep a slice of the pie once passenger numbers recover.

“There is a lot going on in the cargo market at the moment,” says Darren Biddlecombe, from consultancy VesselsValue. 

“Boeing has just added three new sites to increase the 737 conversion market … the market is at its capacity, they’ve actually got enough work to last them till 2024 already.”

Shipping companies are also watching closely. Earlier this month, industry leader Maersk announced it was looking to build air freight capacity as part of efforts to make its supply chain offering more resilient.

Putting its money where its mouth is, the Danish logistics giant said it is buying Senator International, a Hamburg-based freight forwarder that operates around 19 flights a week. On top of that acquisition, it announced plans to expand its own fleet with three leased planes for next year, and buy two new Boeing 777 aircraft that will be in action “by 2024”.

“We want to be flexible, reliable and agile,” says Ferwin Wieringa, Maersk’s global head of air freight. He says the company expects to eventually be split 70:30 between cargo transported on commercial carriers versus its own planes.

It’s not alone in realising the potential. Several other shipping advisory companies and data providers have recently expanded their product offering to ensure they cater for ocean and air, as companies become more flexible in their demands.

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