The airfreight industry has been witnessing some challenging and pronounced consequences in recent months, with two main issues at play: Firstly, the Hamas-Israel conflict has led to inevitable instability within the region, predominantly, but not exclusively, felt by commercial airlines operating to and from the region. Secondly, there is the more recent conflict with the Houthi rebels in Yemen which is impacting commercial shipping going through the Suez Canal, could lead to an uptick in demand for airfreight.
As with any conflict, airlines need to adapt to the geopolitical circumstances, especially when there are concerns about the safety of their passengers, crew and aircraft.
“The current Red Sea crisis emphasises more the impact that disruption to commercial shipping can have on the need to find alternative routes and means, including by way of airfreight,” Andrew Harper, transportation lawyer at global law firm Reed Smith, stated.
“Inevitably, however, there will always be goods that could only ever be transported by sea in the necessary volume and so any reduction in passage through the Suez Canal will not result in a commensurate increase in airfreight activity.
“This is why in our report “Global airfreight’s future”, first launched by the Reed Smith aviation team two years ago, we looked at airfreight holistically and as part of the wider logistics, supply chain and freight sector more broadly – cargo and freight needs to be considered in this context and the sensitivity of airfreight is therefore just one part of the equation.”
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Solution to shipping?
The experience of the Covid pandemic meant that airfreight established itself as an option in times of crisis. It will never be a panacea and replace the bulk volume that commercial shipping can offer, but it does increasingly offer a viable alternative mode of transport.
However, the ongoing situation underscores the industry’s sensitivity to geopolitical events, and the extent of its impact hinges on the escalation of hostilities in the region.
“Should conflicts intensify and potentially spread to other parts of the Middle East, there will be repercussions for aviation, but a lot of our work to manage highly fluid situations for industry participants – many of whom already have robust contingency plans where practical,” Harper explained.
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Supply and demand
The pandemic drove a heightened demand for freighter aircraft as otherwise grounded passenger aircraft were converted to handle cargo, as they couldn’t be used for traditional travel.
As the world has returned to normal after the pandemic, and passenger demand has increased dramatically, there has been talk of over supply of freighter aircraft with rumours of orders with conversion facilities being cancelled as a result.
“It’s clear that – as a starting point – there is evidently more supply in the industry at present which can meet an uptick in demand for airfreight if needed,” Harper highlighted.
“Looking ahead, there is a concern about potential lease defaults from airlines based in the Middle East and areas affected by the Red Sea if the conflict persists over the long term.
“This economic strain on regional carriers would be felt but would not be so pronounced as to be as destructive as other recent events, which the industry has managed to address head on.”
