The increasing importance of air cargo
Air Cargo’s Future: The Changing Face and Utility of Air Cargo
Next-generation air cargo is taking shape here and now. Along with a transforming logistics industry, air cargo, too, is transforming.
Air cargo is adapting to the post-pandemic circumstances. Thus, it’s becoming more effective, improving reliability and flexibility. It’s also becoming more efficient, helping to moderate costs.
In short, air cargo is transforming into a higher value-added mode of transportation. Also, it is becoming a bigger component of a multi-modal strategy.
This transformation will result in more agile, speedy, and resilient logistics services. Both the face and utility of air cargo are changing. This trend will lead to improved performance, customer service, and pricing.
How the face of air cargo is changing
ECommerce is a driving force that extends beyond last-mile delivery. It entails speedy delivery, as consumers want their merchandise as soon as they can get it. The faster, the better.
Also, to meet consumers’ need for speed, many logistics service providers (LSPs) are expanding their services. Some air cargo companies are partnering with passenger airlines to increase capacity availability.
That expands capacity, enabling the capability to ship more goods at once. And shipping more goods at once improves the speed of delivery.
For example, CMA CGM and Air France-KLM have inked a 10-year strategic partnership. In doing so, they now operate as a single service. This partnership expands CMA-CGM’s capacity. And this partnership includes the capacity of Air France-KLM’s 160 passenger planes. (See JOC.)
Also, some ocean carriers, like Maersk, are developing integrated ocean and air services. Maersk reported this move would improve reliability by enabling more dedicated capacity. And that would lead to improved operational performance.
Taking further steps, Maersk acquired a German Freight forwarder—Senator International. Maresk also expects this integration and expansion to enable greater flexibility and agility.
These industry changes will help ease capacity constraints and improve performance. It reflects a move towards forging end-to-end solutions. And this reflects the next stage of development in optimizing cargo flows.
That’s an important and practical attempt to ease structural supply chain bottlenecks.
Continued supply chain bottlenecks
Capacity constraints still plague the seamless flows of cargo. The nation’s coastal and inland ports have yet to recover from the pandemic’s impacts. As companies work to return to pre-pandemic port operations, the value of air cargo is rising..
On the surface, diversifying among different modes of transportation should help reduce congestion. But with the increased interest in air cargo, that mode is also becoming congested. Diversifying among various multi-modal carriers is helping to moderate congestion.
The Wall Street Journal reported the pivot to air cargo has jammed Chicago’s O’Hare airport. Compounding the shift to air cargo, labor shortages have further jammed airport operations. The shift to air logistics has also bumped O’Hare airport to the nation’s leading airport in terms of value.
Note, O’Hare is neither the largest airport with regard to volume (LA) nor the busiest (Anchorage). But with 6.6% of the nation’s trade passing through Chicago, its cargo is high-dollar value freight.
As the face of air cargo is changing, so is the reliance on its utility.
The expanding utility of air cargo
When assessing capacity, performance, and cost, air freight solutions are more attractive today.
As stated above, capacity remains constrained and affects air freight operations. That said, the utility air cargo offers some relief from capacity constraints. And that’s essential to seamless flows.
At present, the industry is dealing with extraordinary circumstances. So, shippers and carriers have increased their reliance on air cargo. But the congestion at O’Hare shows this is a double-edged sword. As the industry moves past Covid’s residual effects, reliance on air cargo should endure.
Speed gives air freight advantage over other modes of transportation. Speed has become a new, critical benchmark. It caters to customers’ expectations and the demands of eCommerce. That makes air cargo a competitive alternative.
And it improves performance by reducing cycle times. Finally, it facilitates seamless flows, as seen by Maersk’s drive to merge its air and ocean services.
Again, the increased reliance on air cargo operations helps moderate costs.
Before the pandemic, ocean shipping offered the most competitive pricing. However, now the pricing of ocean shipping is at record levels. The gap between air and ocean shipping has closed substantially. This makes air delivery a viable option when before, it wasn’t part of the discussion.
Of course, challenges exist for each mode of transportation. But air freight now looks like an attractive option. It offers agility, speed, and competitive pricing.
The utility of air cargo services is increasing because it offers value-added services. And it becomes even more potent when balanced with other modes.
The rise and value of multi-modal solutions
In logistics today, you cannot plan transportation and distribution planning in silos. Strategic planning now extends to and informs end-to-end logistics flows. That boosts multi-modal services, as they help optimize performance, service, and price.
Air cargo is transforming in response to a growing competitive environment. In transforming air cargo, you can meet the changing dynamics of consumer behavior.
Employing multi-modal solutions reflects a logical step. As businesses become more agile, resilient, and responsive, they will survive and profit. They will gain a competitive edge.
How to achieve seamless logistics flows
Achieving seamless logistics flows derives from adapting to today’s conditions. That means streamlining, integrating, and synchronizing those business processes. Then you need the technology to enable those changes.
But that’s not enough. You must also secure strategic relationships that add reliability and efficiency.
Strategic partnerships can help you meet heightened customer demands. In particular, strategic partnerships can improve performance and promote agility, speed, and resilience.
Having a global network also provides a myriad of locations you can service. These core capabilities will help position your company to thrive in the New Normal.
At American Global Logistics, we can help you get ahead of the changing face and utility of air cargo. We stay on top of trends — especially transformative ones.
That will lead to improved performance, customer service, and pricing.
We make that possible with our Global Network of carriers.
When you leverage our vast network, you’ll have the capacity you need when you need it at the price you want.
Contact AGL if you want to position your company to thrive in the New Normal.