Air freight profits from Covid disruptions

Date Added: 25 November 2021

With our wide array of air freight forwarding services, Davies Turner is not surprised to hear that the air freight sector has grown steadily during the pandemic and looks set to enjoy robust activity in the coming months. This positivity is from a combination of the impact of Covid-19, the recovery and the global shipping crisis.

According to a new market research report ‘Air Cargo Services Global Market Report 2021: COVID-19 Impact And Recovery’ published by The Business Research Company, the global air freight sector is expected to grow by 15% this year as companies seek out alternative modes of goods transport to avoid headline supply chain disruption. This will see the sector increase from USD56.48 billion last year to USD64.98 billion] in 2021, with a compound annual growth rate (CAGR) expected to be around 11% to 2025 when the market could be worth USD100 billion.

This valuation is based on air freight prices now being two-and-a-half times higher than pre-Covid levels. This increase has come about as a number of companies have turned to shipping by air in an attempt to avoid the disruption in the sea freight sector has faced that has seen sky-rocketing ocean rates and disruption and congestion at many of the world’s quay sides.

In the run up to the seasonal peak, manufacturers and exporters turned to air freight to ensure stock arrived on time. Delivery from Asia to the key markets of Europe and North America by air is under a week end to end, while goods shipped by sea can face multiple weeks before they are in the hands of customers.

When the world shut its borders to passengers in March 2020, air freight stepped up to the plate to move PPE and other sanitary equipment around the globe. This meant that airline management moved their focus towards air freight when lockdowns saw passenger numbers plummet. Cargo previously represented about 10-15% of carriers’ revenues, but this has risen to about a third for many carriers.

IATA (International Air Transport Association) is of the opinion that when the ‘new normal’ returns, airlines will have undergone a permanent shift towards a greater appreciation of air freight than they had before.
For more information about Davies Turner’s ocean freight forwarding and logistics services, please contact [email protected] or visit https://www.daviesturner.com/air-freight
 

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