Updated: Mar 23, 2021
Alan Dong, OEC Group’s North American Air Manager, is one of the company’s experts in Air Freight. He shares his views about the current state of the industry:
Q: What do you think we’ll see in the 2021 air freight market?
A: Air charter opportunities for large consolidators have increased significantly. I predict a healthy air freight market in 2021. New trade lanes being established will challenge the traditional networks we’ve seen in recent years that piggyback on recreational flights, using a significant amount of passenger plane capacity. That rivalry will make the market more competitive than ever.
Q: What items do you think will be shipped the most via air freight in 2021?
A: In 2020 PPE dominated the air shipping market, but in 2021, I believe the huge growth in e-commerce will have a lasting, evolving impact on the products that will be hot commodities in the air freight market.
Q: What does Amazon’s purchase of 11 planes mean for the industry?
A: Amazon’s recent acquisition reflects the dramatic growth of the stay-home economy. Before the pandemic, we started to see many different department stores closing retail locations and shifting toward online shopping. As the pandemic continued to rage, people began to rely on and prefer online purchasing. This purchase is further evidence detailing how Amazon is trying to capitalize on the global consumer shift toward ecommerce.
But Amazon is not alone. I have seen that a lot of carriers are purchasing new cargo planes, which I find very interesting. UPS purchased eighteen 747-8 freighters and four 767 freighters. Atlas Air took four 747 freighters, China Airlines acquired two 777s, Qantas Airlines purchased two 777s, and Cargolux is considering the purchase of 777 freighters, as well. More and more large airlines are realizing that even though passengers are not flying, significant demand for air trade persists and they should participate.
Q: What does Air Korea’s acquisition of Asiana mean for the air market in Asia?
A: Asiana Airways was the singular, most direct competitor of Korean Air. They overlapped in many trade lanes and provided similar services at similar costs. I think this acquisition will create a broader network for Korean Air and much needed financial stability for the new entity. However, on the downside, the acquisition could also lead to a monopoly in the Korean air freight market and a hike in rates.
Q: How will vaccine distribution affect the air market in 2021?
A: The vaccine will take priority to deliver around the world. The entire operation, with government incentives to deliver the vaccine, should take about two-years. During that time, a significant amount of freighter aircraft will be removed from the market, reducing overall capacity. Consequently, many older freighters will come out of retirement and passenger aircraft will be temporarily reconfigured to move cargo.