In a globalised world where supply chains interweave across continents, disruptions in one sector can send shockwaves throughout the entire logistics industry. The air cargo market, known for its speed and efficiency, has recently found itself in a unique position due to disruptions in the trucking and ocean cargo segments.
Reshaping Domestic Air Cargo Preferences
The sudden bankruptcy of American transportation firm Yellow Corporation has unveiled a cascade of challenges, with one of the most prominent being space availability. The perceived threat of limited space has led businesses to explore air cargo as an alternative for domestic shipments, which historically might not have been considered. The closure of Yellow has prompted companies to consider air cargo as a backup plan, particularly when facing issues such as port congestion or disrupted land routes.
Highlighting the changing perspective, businesses now consider airfreight for domestic challenges. For instance, exploring air cargo into the USA via Rickenbacker, the Columbus airport, allows companies to efficiently transport cargo to the nearest point of need. This shift underscores the evolving notion that air cargo isn’t confined to international shipping alone, but is also an effective remedy for domestic logistical hurdles.
Blank Sailings and the Demand-Rate Paradox
Blank sailings entail the cancellation of scheduled ocean voyages due to diminished demand. This manoeuvre operates on the basic principles of supply and demand: by decreasing the supply (in this case, cargo vessel capacity), shipping lines can elevate rates, creating a domino effect across the entire industry. This process of capacity reduction creates a ripple effect that is now palpable in both ocean and air cargo sectors. This discrepancy has pushed businesses to consider air cargo as a more predictable alternative, despite its higher cost.
As the rates for ocean shipping rise due to decreased capacity resulting from blank sailings, the once-significant cost gap between sea and airfreight experiences a notable contraction. This shift encourages businesses to embrace hybrid shipping methods, strategically allocating goods to air freight for urgent needs, while capitalising on cost-effective ocean shipping for less time-sensitive consignments.
Labour Shortages and Global Supply Disruptions
The worldwide shortage of labour across various industries has amplified supply chain disruptions. In the ocean cargo sector, this has translated into delayed vessel departures and reduced production capabilities. When facilities are unable to produce the necessary goods to fill a vessel, scheduled sailings are postponed or cancelled. Consequently, businesses are left grappling with supply shortages, leading some to explore air cargo as a means to bridge the gap.
Facilities grappling with workforce deficits struggle to maintain their usual production volumes. This deficiency in output disrupts the flow of goods destined for ocean shipping, leading to a domino effect of delayed or cancelled scheduled sailings. This acute vulnerability forces businesses into a perilous dance with scarcity, prompting some to explore air cargo as a lifeline to bridge the widening gaps in their supply chains
Seizing the Opportunity: How Providers & Suppliers Can Respond
For air cargo providers, the challenges posed by disruptions in the trucking sector present an unexpected opportunity. To capitalise on this trend, flexibility and preparedness are key. Having equipment readily available and positioned strategically to swiftly respond to increased demand is vital. By anticipating the needs of businesses seeking alternatives due to trucking disruptions, air cargo companies can position themselves as reliable partners in times of crisis.
Freight forwarders have a crucial role in mediating these disruptions. Companies that operate across multiple modes of transportation, including air and ocean, have a unique advantage in tackling these challenges. By leveraging airfreight contracts and agreements, these multi-modal organisations can offer agile solutions to clients facing disruptions in either sector. This collaborative approach ensures that businesses have access to alternative logistics options when the need arises, minimising the impact of disruptions on their operations.
The interdependence of various modes of transportation within the supply chain is undeniable. The recent disruptions in the trucking and ocean cargo sectors have underscored the need for adaptable strategies in the air cargo market. As businesses grapple with space availability concerns, blank sailings, and labour shortages, air cargo providers have an opportunity to demonstrate their agility and readiness. By positioning themselves as reliable partners and offering solutions that bridge the gaps left by disruptions, air cargo companies can solidify their role in a rapidly evolving logistics landscape. The domino effect of disruptions has redefined the value of air cargo, not only as a fast international option but also as a versatile domestic alternative.