Authored by Ambrish Kumar
The exponential contagiousness of the pandemic that compelled lockdowns caused an unprecedented hindrance to most businesses. The aviation and air travel sector has been the worst hit.
Meanwhile, air cargo was not as severely affected as air travel. However, the logistics and supply chain have been impacted due to the reduction in cargo volumes. The global air cargo movement figures went down by almost 30 percent year-on-year at the beginning of the pandemic. Nevertheless, as per IATA’s report, by Q3 of 2020, the gap is narrowing and now air cargo is only 13 percent lower than in 2019.
The dismay does not end here. The demand for certain goods has increased which mainly comprises pharmaceuticals, vaccines, medicines, medical, surgical, hospital goods, and so on. In India, the trade deficit has narrowed to USD 6.77 billion in August 2020, the major reason being the plummeting of imports by more than 43 percent.
This is a good sign as exports have increased for products like pharmaceuticals (21 percent), organic chemicals, etc. Also, the demand for other commodities has also picked up momentum in India and globally, with the re-opening of the major economies of the world. The global demand, measured in cargo tonne-kilometers (CTKs), which was initially at minus 23 percent year-on-year, improved to minus 13 percent by July 2020.
The signs of the improving international economic activity are obvious if we look at the performance of the Purchasing Manager’s Index (PMI) that measures the economic condition of the manufacturing sector, returned to above 50 points month-on-month by Q3 of 2020 which had dipped to below 30 points in April.
The non-operation of scheduled passenger flights to most routes across the globe has led to a serious reduction in belly capacity. As per IATA, the belly capacity for international air cargo reduced by more than 70 percent during the pandemic. This is also directly proportional to the costs incurred. The lesser is the capacity, the higher remains the air freight.
Of the total global capacity measured in available cargo tonne-kilometers (ACTKs), almost 40 percent belong to the belly capacity of passenger aircraft. The remaining 60 percent of air cargo transported is through cargo-only aircraft. The IATA figures suggest that there is an average slump of almost 32 percent in the ACTKs as compared to the previous year.
Another reason is that due to the lack of passenger travel, the wide-bodied passenger aircraft with larger belly capacity is mostly grounded and non-operational. Most air carriers are operating smaller aircraft as per passenger demands to save, landing, parking, fuel, and other operational costs. However, there are limitations on these narrow-bodied aircraft for goods that require special handling like temperature control, unitized loading, heavy goods load-ability, big-sized cargo and so on.
While a wide-bodied aircraft with a good payload can carry anywhere between 10-30 tons per flight depending on the aircraft type, the capacity of a narrow-bodied aircraft is only 2-6 tons per flight. Moreover, the smaller aircraft cannot fly for more than 4-5 hours at a stretch, which means, long-haul air cargo movement is a serious concern.
With most of the fore-running vaccine candidates across the world reaching into the core testing and human trials stages, efforts are being made to produce vaccines for the 7.8 billion global population to get rid of the coronavirus. Now, the massive challenge coming across is “Global Distribution of the COVID – 19 Vaccine”.
It has been projected that by the end of the year “2020” companies will be able to launch the vaccine after different phases of clinical trials. We can expect and forecast the dire need for a robust and falter-proof supply chain integration and a phenomenal air cargo capacity right from the beginning of 2021. The vaccines would require express and quick transportation. There will be a need for large cold storage facilities, at transit points and most international gateways like airports.
Most importantly the air cargo capacity will be in high demand to get the vaccines available to various parts of the world. Also, since vaccines need special handling requirements, there will be a need for palletization and unitisation of goods which would need wide-bodied aircraft and freighters to operate in large numbers.
Another risk factor involved that cannot be ignored is the security of the vaccines. As the vaccines are what every person in the world is currently looking forward to, there can be cases of pilferage, tampering and robbery during the transit. It would require special planning, secured loading and safeguarding throughout its movement. This means the logistics required for the vaccines would be in lines with that followed for the movement of valuable goods like gold, silver, currency notes, etc.
This is the time when rigorous IT -enabled solutions, supply-chain transparency and visibility, risk-mitigation and seamless logistics management is sought with the help of the latest technologies like Machine learning and AI. We wish if blockchain technology had been in effect before the pandemic.
In nutshell, the whole world is waiting for the vaccine fervently and we ought to work together to make this mission possible!
Ambrish Kumar is Founder of Zipaworld and Group CEO, AAA 2 Innovate Private Ltd.
