Alan Dong, National Air Cargo Director for OEC Group, outlines the current state of the air market and what shippers should expect moving into 2023.
What can we expect for the future of air freight?
Traditionally, air freight was used to ship highly valuable cargo, like electronics and garments, or cargo that needed to be delivered within a tight timeframe like general perishables or pharmaceutical products. During the pandemic air freight was frequently used to ship personal protective equipment (PPE), COVID test kits, and other urgently needed medical supplies. Simultaneously, more and more shippers were switching from ocean to air to avoid port congestion and other supply chain restrictions in the US. Many shippers were frequently faced with slim delivery windows and emergency shipping scenarios, so people were willing to pay more to ship by air and meet deadlines. Today, air freight is returning to its pre-pandemic role as a necessary piece of a well-rounded overall logistics strategy. It’s becoming apparent that it will return to its original role in every shipper’s logistical plan. I believe it will become increasingly popular, particularly regarding e-commerce.
Are shippers still using air as an emergency option to meet tight deadlines?
As things slowly return to normal, it’s clear that many supply chain weaknesses exposed by the pandemic still exist. Air freight is a very useful tool in avoiding those weakness and their symptoms (congestion, backlogs, equipment shortages, etc.). It’s also still very practical when it comes to meeting tight deadlines or shipping in emergency situations. As inventory issues taper off, I also think we’ll see a marked shift back to zero inventory models, and air shipping can be extremely helpful in successfully maintaining those strategies. Additionally, air freight has emerged as an essential solution when shipping e-commerce products. Air freight timelines are well-suited for e-commerce, and building consolidated shipments with a wide variety of e-commerce goods can actually minimize air shipping costs. While air is not always the least expensive option, it is a terrific, reliable and cost-effective choice when a shipper needs their cargo faster than any ocean service can provide. For shippers who predominantly use air freight, they can avail themselves to more cost-effective solutions as long as they develop and follow a comprehensive supply chain strategy.
Are there any cost-cutting strategies associated with the air market?
Last-minute air shipping is almost always an expensive investment. However, consistency makes a huge impact on cost. The more consistent a shipper’s air freight orders are, the more effectively providers can plan. More effective consolidation directly leads to lower rates. Certain commodities and categories of air shipping grouped with high levels of consistency and proper advanced planning can minimize costs even further, as well, and in some cases that approach will offer substantial savings.
How do you see air freight fitting in to a shipper’s overall supply chain strategy in 2023?
Generally, as air cargo rates revert to pre-pandemic levels, air shipping will largely return to its traditional role with some evolution regarding e-commerce demand. There are many ways to incorporate air freight into multifaceted supply chain strategies that could ultimately make them more cost-effective and reliable overall, especially for shippers who have a little leeway with their delivery times. Exactly how it fits into a shipper’s strategy obviously depends on that individual shipper’s needs, but it’s expected that more shippers will leverage air freight strategies moving forward. Experts are predicting ocean freight to become busier in the third and fourth quarter, so right now—while the market is in a slower phase—is the time to strategize with an expert provider and capitalize on current conditions.
What advice would you have for shippers looking for air solutions in the new year?
As I said before, consistency is absolutely key. Additionally, the ability to plan ahead—something that isn’t always easy for your average shipper—is absolutely necessary to minimize costs. The final impact varies across sectors and shipping timelines, but if a shipper needs cargo more quickly than can be achieved through ocean shipping and they can plan ahead, then they should partner with an expert and investigate more cost-effective air shipping solutions.