Air freight market and airfreight forwarders are the backbones of the global trade system. Every year, trillions of dollars worth of goods are shipped across the globe by air. Not only it is a great alternative for low-volume and high-value shipments, but it is the fastest transport alternative available. With air freight, one can ship their goods almost anywhere without worrying about its security as they undergo minimum handling.
Impact of COVID-19 on air freight
However, the outbreak of the Coronavirus disease (COVID-19) and lockdown across various countries has hampered the global air freight industry. According to Allied Market Research, the outbreak of COVID-19 has greatly affected the market. The economic crisis caused due to lockdown has severely hampered the international transportation. The outbreak of the virus and inability of developed and developing countries to control the spread of the virus have disrupted the production cycle and supply chain. Evidently, this hampered the air freight market.
The demand for air freight declined since personal protective equipment (PPE) is no longer acutely needed. Moreover, the retail cargo is not yet back in the air as shippers prefer sea freight or rails over air transportation. However, air freight would benefit when the favorable situation occurs or when a suitable vaccine is approved. Apart from this, July was a slow month for air transportation as it is a favorable time for sea freight.
Despite the pandemic, Turkish Cargo maintained its foothold
COVID-19 and rising death tolls have brought the air freight and travel industry to a sudden halt as airlines ground planes to comply with lockdown measures. During this ongoing pandemic, the global air freight market suffered severe shrinkage. However, Turkish Cargo did not witness any loss of tonnage and performed the role of a global bridge and prevented the interruption of the international supply chain.
During these trying times, the division of Turkish Airlines (THY) managed to strengthen its foothold in the global air freight industry and gain market share to 5% during the pandemic. Turkish Cargo transported one out of 20 air shipments, even though there is more than 28% of shrinkage in the global market. In addition, it offers service to around 90 direct cargo destinations, including Moscow, Oslo, London, Bangkok, New York, and Casablanca, with high-tonnage capacity.
Turkish Cargo has acquired special provisions required for carrying various medicine before the pandemic, which has enabled it to prevent supply chain disruption and carry vital medical freight.
Increased use of air freight booking platforms
Initially, air freight booking platforms were reluctant to allow shippers to book online owing to the fear of the backlash from carriers. However, a handful of forwarders now see no objection to shippers accessing prices.
Online booking platforms were not in favor of the opportunity to advertise rates directly to shippers and wanted to keep the platform accessible only for International Air Transport Association (IATA)-regulated freight forwarders. Once shippers know the dynamic pricing of the freight, then can get a reduction of agree a commission with the carrier, leveraging other freight. On the other hand, airlines could look at individual consignments and sell on volume or weight, whichever is highest.
Future of air freight and new opportunities
From a vantage point, the future of air freight seems bright. According to the IATA, the global air freight industry is all set for growth. However, there will be a slide of 3% in 2020, and the industry would settle at around $101.2 billion.
Last year, the industry suffered the implications of the trade war between China and the United States and declined global trade. However, this year and onward, the world tread would regain its position and the U.S. re-election would somewhat reduce the trade tension. In the future, there are number of opportunities stored for the industry. For instance, there will be market for specialized services such as cold-chain, perishables, and pharmaceuticals, which must be carried through air as it takes lesser time than any other transportation alternative.
On the other hand, the e-commerce industry and its market players demand aircraft. In fact, in June 2019, Amazon Air initiated daily flights with Amazon-logoed aircraft. Rickenbacker International Airport has become one of the major air cargo hubs. The airport offers several scheduled services for U.S. importers and exporters. This shows that the post-pandemic world is expected to be favorable for the air freight industry. Currently, the market is witnessing a setback however, the market would gain its previous position in a short time.
The post-pandemic world would bring new realities, new regulations and forwarders would have to comply with them. However, as the demand for e-commerce increases and the global trade gains the foothold, the revenue of air freight market is bound to fly high in the future.