Contact us

The State of Air Cargo

Every mode of cargo transport has been impacted by the COVID-19 health care emergency, but none more dramatically than air cargo. With global passenger demand drying up, airlines sharply reduced passenger schedules, and with it, large amounts of economical cargo capacity. While freighter aircraft move huge trade volumes globally, passenger bellies still fly roughly 50% of the cargo across the Atlantic and 40% across the Pacific.

Air cargo demand has also been rocked by several major forces. Urgent needs for personal protective equipment, medical gear and laboratory supplies from all corners of the globe have sharply increased demand for charters and space on remaining scheduled flights. The recent reopening of the Chinese economy saw an ocean-to-air push to rapidly resupply products where destination inventories were running low. But going forward, the demand outlook from more traditional manufacturing and retail sector air cargo users is uncertain with virus-driven closures in Europe and North America.

Today’s air cargo options in a dynamic market

Freighter charters are a clear option for larger moves requiring 80-130 metric tons of cargo capacity with large gauge Boeing 747 and 777 freighters. Indeed RIM has been an active charter market leader securing both trans-Pacific and trans-Atlantic moves for various customers. FEMA’s Project Airbridge has contracted multiple charters with U.S.-flag freighter operators Atlas, FedEx, Kalitta, National Airlines and UPS. Non U.S.-flag freighter carriers also present charter options, but the global COVID-19 response has tightened up charter market pricing to 2 to 2-1/2 times what might be arranged earlier.  Medium gauge aircraft such as Boeing 767F, Airbus A-330F and McDonnell Douglas MD11F may also be available from airlines in some regions for smaller charters of 35-80 tons.

Scheduled freighter services have been maintained by most airlines to and from key U.S. gateways and may be a preferred option for most cargo. Earlier cutbacks in trans-Pacific schedules due to China’s coronavirus shutdown have largely been restored. Still, expect market pricing for scheduled freighters to be at elevated levels.

Passenger cargo charters have made news lately as many passenger airlines have responded to strong air cargo demand with lower deck cargo charters of wide-body passenger aircraft, typically with high belly capacity Boeing 777-300ER, 787-9 and 787-10 aircraft. These offer up to 50 metric tons of belly capacity. Unlike freighter aircraft with main decks, cargo on passenger aircraft must fit lower deck height limits of 62” and in most cases not exceed 125” length-wise. Some airlines are also “seat loading” individual cartons and packages, while a few are going further and temporarily pulling seats from some aircraft to maximize passenger cabin cargo capacity.

Many of these scheduled cargo-only passenger flights have quickly evolved to accepting smaller bulk and container bookings from multiple customers, not just single customer charters. Even Southwest Airlines has found a way to offer its Boeing 737 narrow-body bellies for cargo-only charter opportunities.

Scheduled international passenger flights have been sharply reduced but still fly on a few larger trade lanes, carrying belly cargo as before. But pricing levels in many markets have also risen.

When will the capacity situation return to normal?  Operators such as Atlas and FedEx are starting to put mothballed freighter aircraft back into service.  At the same time, many passenger airline executives are indicating they expect passenger demand to take a year or more to recover. That means a slow resumption of scheduled and more economical belly capacity. But as long as jet fuel prices stay low and demands for urgent air cargo support a higher rate structure, cargo-only passenger flights are likely to be around for a while. But a key concern is the level of non-COVID related air cargo demand in a recessionary economy.

Given the unsettled space situation, past rate shopping practices may not be prudent or feasible today as now available cargo space may quickly disappear.  Be prepared as airlines may ask shippers to quickly commit their traffic into available space and guarantee the revenue.  In some high demand markets, pricing may not even become firm until day of departure.  Look to RIM’s expertise in air cargo to help navigate these choppy industry waters and secure needed capacity competitively.