- eCommerce promises to be an enduring trend propelling the growth of air freight.
- Lingering effects of the pandemic, such as China lockdowns, will disrupt air freight.
- Increasing geopolitical tensions will weigh more heavily on supply chains.
- Supply chain disruptions will become a permanent part of the logistics landscape.
- The advantages of air freight will offset future challenges as part of a multi-modal strategy.
ECommerce is hot. It’s the wave of the future, and it’s changing logistics. One major way it’s changing logistics is by emphasizing speed and customer service.
Stated otherwise, customers are demanding speedy delivery as they increase their online orders. To meet this increase in demand, shippers are pivoting to air freight.
Air freight offers several benefits to customers. We’ll delve into those benefits in this post and review the promise and limits of air freight.
On that note, let’s dive into this topic and how it’s reshaping logistics.
How air freight is reshaping logistics
Customer demand and focused technologies propel change
It all begins with customer demand. Since the pandemic, customer demand has skyrocketed. Also, importantly, that demand has shifted from in-store to online shopping. Those two changes combined are enormous. Both stoke air freight’s growth and promote the transformation of logistics.
That said, reliance on and expansion of air freight has limits. Adding to air freight’s challenges is pent-up demand from the pandemic. But that will run its course. However, eCommerce promises to be an emerging trend that will endure and likely grow. Carrying eCommerce into the future besides demand is the expansion of focused technologies.
IT companies are developing new technologies to achieve specific outcomes. That’s driven by customer demand as well as cost. Customers seek technology solutions that are easy to implement and provide tailored solutions quickly.
They also want to invest in affordable solutions, as costs remain a key concern. That means today’s technology solutions must deliver actual results that add to the bottom line. To maintain a competitive edge, your business must be sustainable.
Technologies that create seamless data flows will spur air cargo’s growth and transform logistics. Also, technologies that provide E2E visibility, refine performance analytics, improve inventory management, and enhance customer self-service lay the foundation for continued eCommerce growth.
Speed and rapid change facilitate agile and resilient distribution strategies
Still talking about customers, new fulfillment strategies must account for evolving customer expectations. That calls for speed in response to rapid change. Yet according to Aviation Business News, 60 percent of B2B companies are still working to implement a multi-modal strategy that maximizes air freight.
Air freight offers a potent building block in a multi-modal strategy. It meets consumers’ need for speed. And it can help your company adapt to rapid change more easily. In maximizing air freight, you can relieve capacity constraints while improving performance.
That’s not to say, air freight has no challenges. It does. In the long run, the advantages arguably outweigh the short-term disconnects and disruptions. The main point is that expanding reliance on air freight facilitates responsive logistics.
In an Aviation Business News article, Nabil Malouli, DHLs global product lead stated: “… in the next 3-5 years over 50% of businesses will be making some type of change to their distribution strategy”.
In short, the growth of air freight contributes to the “survival of the fittest”. If you merge air cargo into a multi-modal solution, you can build an agile and resilient distribution strategy.
The X-Factor: Geopolitical issues
Increasingly, geo-politics is becoming a key consideration in decision-making. The current geo-political crises of hot war and cold war are having an outsized effect on supply chains.
As logistics undergoes transformation, so, too, is the geopolitical landscape. A division between East and West is in the making. According to the International Aviation Transport Association (IATA), although Ukraine and Russia comprise under ten percent of international air transport, the war has far greater impacts.
Disruptions to supply chains include the rerouting of air traffic, as airports are inaccessible in Ukraine and Russia because airspace has been closed. Airports, too, have been closed. That decreases agility and degrades seamless logistics flows. That, in turn, decreases the safety of all planes flying near Russian airspace.
Another disruption stems from oil price instability. The longer fuel prices remain volatile, the greater the impact on the air freight industry. At $67 per barrel, IATA estimated the airline industry would lose $11.6 billion. Brent crude just rose to $114.42 per barrel on May 16, 2022, increasing 64.40% from one year ago. That further results in disruption to the industry.
At $67 per barrel, fuel represents 20% of costs. With the price of Brent crude at $114.42 per barrel, the percentage of overall costs would increase substantially.
And don’t forget China’s zero-tolerance policy on the pandemic. That, too, is a formidable geo-political trend creating supply chain disruptions.
Of course, the war will eventually end, and so will China’s lockdowns. But as long as they persist, the geopolitical landscape will affect aviation adversely. It’s the X-Factor every shipper and carrier must consider.
Positioning your business with responsive air freight logistics solutions
As mentioned above, the reliance on air freight logistics is increasing. It’s doing so out of necessity (survival) but also for profit. And by itself, air freight is a powerful tool. But as a building block of a larger multi-modal strategy, it is even more compelling.
Its popularity grew because of Covid-19 lockdowns. It created an eCommerce trend that shows no signs of weakening. Rather, eCommerce is a trend distinguishing the future of logistics.
At its heart, eCommerce is all about customer focus. Satisfying customer expectations is now at an elevated level compared to pre-pandemic times. And forget about today’s increased supply chain challenges. Today, customers demand speed, quality, and competitive pricing.
They want it all. Expectations have never been higher.
To meet customers’ expectations, shippers have made air freight a greater part of their delivery strategies. It supports the diversification and optimization of resources. This helps to increase still limited capacity and meet customers’ expectations.
At American Global Logistics, you’ll find a partner who can get the capacity you need. We also help you realize the promise of air freight solutions. We won’t disappoint.
Contact us to learn more about our transportation solutions. We’ll explain how we can leverage air freight for your competitive advantage.