The epidemic has changed the way freight is played, and the business transformation is faster than expected: air freight, which usually used a seasonal pricing change system in the past, may now have different prices every morning and afternoon.
In the fourth quarter of this year, sea transportation was blocked at ports, resulting in supply chain disruptions, which further boosted air transportation. The International Air Transport Association (IATA) recently released a regular report on global air cargo. It shows that global air cargo demand in October 2021 will continue to be much higher than the pre-epidemic level. The capacity bottleneck has been slightly eased. Global air cargo demand (in terms of freight ton kilometers or "CTKs" calculation) increased by 9.4% year-on-year in October 2019 before the epidemic (international demand increased by 10.4%).
IATA information shows that supply chain disruptions and resulting delivery delays have caused suppliers to take too long to deliver. Often manufacturers will use faster air freight to make up for lost time in the production process. Before the peak of year-end retail activities such as Christmas, inventory sales remain low compared to , which is good for air freight. Manufacturers turn to air freight to quickly meet demand.
CBN reporters reviewed recent statements from the three major U.S. airlines and found that both American Airlines and Delta Air Lines will have record cargo revenue in 2021, and United Airlines also predicted strong performance.
Wan Song, head of DHLink business unit of Dunhuang Network, said in his first interview with reporters that this year, air freight prices have gradually increased from 60 yuan/kg. From the second half of this year to early December, air freight prices have reached more than 100 yuan/kg, and finally reached more than 100 yuan/kg. The peak reached 120 yuan/kg.
"Starting from mid-December, because traditional foreign trade generally enters the off-season (the peak season for cross-border e-commerce will last until January), the air freight price has slightly decreased, to 60~70 yuan/kg, which is still higher than last year's price." He He explained that regarding the situation of chartered flights, after the epidemic, chartered flights of the same model as before would cost at least US$1 million.
After the port is blocked, passenger planes are converted into cargo planes
Due to its transportation characteristics and cost-effectiveness, the price of air freight is usually much higher than that of sea freight.
However, in 2021, due to the port congestion and the sharp surge in shipping costs, the speed and relative cost-effectiveness of air transportation are increasing.
IATA data shows that global merchandise trade and industrial production are still higher than pre-epidemic levels. At the same time, air freight is highly competitive with the cost of container transportation: before the crisis, the average price of air freight was 12.5 times that of sea freight. By September 2021, the price of air freight will be only three times that of sea freight.
In terms of cargo volume, taking October as an example, IATA data shows that Asia Pacific Airlines' international aviation cargo volume increased by 7.9% in October 2021 compared with the same period in 2019. The growth rate almost doubled from the previous month (up 4%).
Compared with October 2019, North American airlines international cargo volume increased by 18.8%, which was equivalent to September's performance (18.9%). Performance in North America was supported by demand for faster shipping times and strong U.S. retail sales. Compared with October 2019, international capacity fell by 0.6%, a significant improvement from the previous month.
European airlines saw international cargo volumes increase by 8.6% in October 2021 compared to the same period in 2019, an improvement over September (up 5.8%). Manufacturing activity, orders and longer supplier lead times remain supportive of air freight demand. Compared with pre-crisis levels, international capacity fell by 7.4%, a significant increase from last month (down 12.8% from pre-epidemic levels).
An executive of an international freight forwarding company told China Business News that their company helped organize charter flights many times during the epidemic. At that time, the price of charter flights increased, mainly to transport medical/personal protection supplies that were urgently needed during the epidemic. However, this round of air freight boom in 2021 is related to the changes in the overall business format. It can be regarded as a demand spillover due to the strong but unsatisfied demand for sea freight. Generally speaking, coupled with the problem of the Omicron strain, the gameplay of global freight Something has changed again.
Wan Song gave a vivid example when being interviewed by a reporter from China Business News. He said that for example, if he wants to export a batch of clothing, it originally had to be shipped by sea, but "now it's far away. I have to quickly deliver 2 tons of this 20-ton batch of clothing to the U.S. market by air, so that the U.S. has goods to sell." , others continue to float on the sea.As a factory in China or a trader in China, I will adopt such a strategy.”.
Rob Walpole, vice president of Delta Cargo, said that although the aviation industry has obviously faced major disruptions in the past two years, these The disruption actually created an opportunity for the cargo business to contribute in a bigger and more impactful way than ever before in 2021 in Delta's 75-year history of cargo operations, Walpole said. May generate its highest ever cargo revenue - more than $1 billion
American Airlines spokesperson Laura Bassel also said that the airline is "on track to have a record-breaking year in cargo revenue." During 2021, American Airlines flew more than 4,800 cargo-only flights, transporting more than 346 million pounds of cargo. This year's cargo included more than 18.5 million doses of COVID-19 vaccines to Central and South America. The airline said its cargo volume in the third quarter was $519 million, an increase of 84% from the same period in 2019. "As in previous quarters, our cargo business once again achieved record quarterly results for United. "Andrew Nocella, Chief Commercial Officer of United Airlines, said that in the first three quarters, United Airlines' cargo revenue totaled US$1.6 billion, an increase of 88% over the first three quarters of 2019.
During the same period, Boeing information shows that, Boeing's freighter sales hit a record this year, including orders for 80 new wide-body freighters and more than 80 orders for Boeing's modified freighters.
Just recently, Boeing received another order from UPS: UPS wants to buy 19 Boeings. Freighters are scheduled to receive these 767 freighters between 2023 and 2025. According to estimates, the total value of these aircraft is US$1.5 billion. The executive of the aforementioned international freight forwarding company told China Business News that this is the so-called new way of playing. , even after the epidemic, major freight companies also judge that online shopping behavior will continue. While predicting that the bottleneck problem of shipping will not be greatly alleviated in 2022, more and more freight companies are planning how to take advantage of the off-season for air transportation. Window period
Before the epidemic, airlines used winter pricing for their winter flight schedules and summer pricing for their summer flight schedules, but now they can even update prices twice a day, and freight forwarders digitally book this industry, which was in its infancy before the epidemic. , has also taken this opportunity to grow.
Freightos is an online marketplace that connects cargo airlines with freight forwarders. Its subsidiary is Barcelona-based , which enables freight forwarders to compare prices. When WebCargo began offering cargo e-booking to airlines in 2019, only three cargo airlines (starting with Lufthansa ) offered pricing, but others such as Delta Air Lines gradually joined, and as of December this year, there were 30. Freightos CEO Schreiber said the value of air cargo electronically booked on the WebCargo platform rose from about $1 million in 2019 to 2021. "We're seeing many cases where ocean liners are anchored out of the Port of Los Angeles and Long Beach for weeks, and retailers trying to ship common merchandise like toys or clothing are trying to ship it by air." transportation. "He said.
Shilaibo also emphasized that although the cost of air freight is usually 10 times that of sea freight, this gap has now been reduced to 3 times because the cost of sea freight has increased too much.
He revealed that currently, the main Air cargo includes perishable goods such as medicines and flowers, high-value small commodities such as mobile phones and diamonds, and urgent goods such as machinery parts. The Global Container Freight Index launched by the Baltic Shipping Exchange and Freightos shows the cost of transportation from China to the U.S. West Coast. It is US$14,616/FEU (40-foot standard container).
Wan Song explained to China Business News that the sales season for high-value electronic products (mobile phones, tablets), seasonal clothing, seafood, and fresh food is very short. , and products that will be reduced in price after the sales season."In other words, as time goes by, the more the value of a product is reduced, the more likely it is to be transported by air, but the premise is that the entire process from design to production to shelf is very short. Some holiday decorations and other products, Although the timeliness of use is very strong, because it can be produced much earlier, or it can continue to be sold in the second year, it is generally not necessary to transport it by air. "
Wan Song also said that in most cross-border e-commerce scenarios. Here, because the mainstream of cross-border e-commerce is fragmented small orders, sellers often adopt two strategies: First, for highly competitive and homogeneous goods, sellers will choose to bear the pressure of rising shipping prices themselves. Make sales at low prices; secondly, absorb the pressure of rising freight prices by increasing the selling price of goods. However, sellers cannot pass on all these costs to buyers 100%, and they have to bear some of them to a greater or lesser extent. And even if the price of goods increases, they still have to face the dilemma of thinner profits and fewer orders (because price increases will affect sales).
"We have also done some research and found that the increase in logistics costs will probably reduce sellers' profits by 5% to 10%." He said that rising costs are only one aspect. Accompanying the shortage of shipping capacity is uncontrollable delivery time, poor consumer experience, and great harm to cross-border e-commerce sellers. This is the dilemma of sellers and the industry.
He revealed that they are currently taking advantage of the off-season window period to actively promote strategic cooperation with China Post , Air China, and mainstream charter operators in the market, and negotiate charter flights and cabins, so as to grasp the shortage of air transport resources as much as possible to stabilize their 2022 Years of transportation capacity and freight rates provide users with accurate and controllable arrival expectations and delivery times.
