Ocean Freight Carriers Investing in Aircraft
September 20, 2022
Ocean carriers are increasingly offering air cargo services as customers are looking for an intermodal logistics solution to ship freight around the globe. According to experts, it is more than just simplifying logistics but also about making it effective, efficient, and optimized. Some of the largest shipping companies have already added aircraft to their fleet while others have opened an air cargo division. This is because global supply chain disruptions have created a demand for cargo to be flown.
Why Customers Choose Air Freight
In the majority of cases, air is only part of the solution. Some customers opt for air freight because the products they ship require a quick service. Air is a better alternative because ocean freight may take weeks to ship, which is not an option for time-sensitive products. In fact, demand for air cargo has grown by 2.2 percent in 2022 compared to pre-pandemic levels.
Nobody was concerned about logistics chains before the onset of the pandemic. However, nearly three years into Covid-19, businesses began to realize that their logistics divisions are not as efficient as they should be. And before the pandemic, contacting an ocean carrier and booking a freight service was all it took to ship cargo. Yet, factories in China shut down three years ago due to largescale Covid-19 quarantine efforts. There was uncertainty about when factories would resume operations because cities and provinces announced different periods of extended shutdowns. Demand climbed dramatically in 2021 when restrictions gradually began to be lifted, causing significant supply chain disruptions.
Disruptions continued into 2022, mainly because of strikes at ports across Europe and congestions at ports in North America. All this showed businesses that supply chains should certainly be a topic for their executive boards. Companies are also increasingly partnering with carriers rather than reaching out when they need to ship cargo. This definitely helps shippers improve their planning process.
Why Are Carriers Purchasing Aircraft?
Analysts point to the fact that ocean carriers are sitting on cash right now, which makes purchasing aircraft an attractive option. As they hardly made any investments during the pandemic, ocean freight carriers are looking for alternatives for spending it. Buying aircraft could be one option worth considering while airlines, which were hard hit due to Covid-19, need the money. Major ocean carriers are investing billions in aircraft (Boeing 777s and Boeing 767s) to be flown on Asia – Europe and Asia – U.S. routes. Other ocean carriers have bought a stake in airline operators, which allows them to share cargo space.
Yet, experts warn that now it may not be the best time to buy aircraft. The fact is that major carriers have already bought airplanes while demand for ocean freight has been in decline over the last couple of months. This means there is less pressure on carriers already. Buying aircraft can pay off in the long term, however, if it’s done with the goal of upselling.
