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The impact of the Covid-19 pandemic on the aviation industry comes in many forms, from a sharp decline in passenger traffic to an increase in the world’s dependence on air cargo.
With the continued risk of infection at airports around the world, passenger traffic has dropped by more than 90 percent, forcing airlines to cancel scheduled flights everywhere. Due to the large-scale cancellation of scheduled flights and, consequently, the inability to load the luggage compartments of passenger aircraft, carriers have lost almost 50 percent of their cargo capacity.
Air carriers are having to rush to invent new delivery methods to meet the increased demand for goods needed to combat the crisis caused by the coronavirus pandemic. And those who have adapted to the challenges of the new time are confidently staying afloat, extending a helping hand to the numerous victims.
Current industry trends
The air cargo segment is valued at $6 trillion in value terms. In these difficult times, global trade is mainly focused on the supply of goods needed to fight Covid-19, in particular pharmaceuticals and medical equipment.
The emergency and rising demand for these products has created an exponential demand for air cargo. However, with a decrease in cargo volumes due to the inability to use the luggage compartments of passenger aircraft for the transport of goods, the increase in demand has affected delivery times. In addition, according to a report by the International Air Transport Association (IATA), compared to 2019, the total cargo turnover in 2020 will decrease by 10.3 million tons to 51 million tons.
While the air cargo sector is still facing crisis and capacity shortages, charter flights have become an effective response to the need to run global supply chains seamlessly.
“With travel bans and quarantine restrictions, it was not easy to manage supply chains, especially when making emergency deliveries of medicines and PPE. Charters were the only option as scheduled commercial flights were suspended and the need to deliver relief cargo was urgent,” Jacob Matthew, President and Board Member of National Air Cargo, told The STAT Trade Times.
Air Freight in a New Reality: Without Seats and Passengers
2020 can already be described as the worst year in the history of the aviation industry and supply chains in general. According to IATA, airlines will lose $84.3 billion in 2020. “On average, each day of this year will bring $230 million in industry losses,” said Alexandre de Juniac, CEO of IATA.
In 2020, total cargo turnover could drop to 51 million tons, but freight revenue could rise to $110.8 billion compared to 2019, according to IATA.
The increased hype around air freight and reduced capacity is expected to result in a 30 percent increase in freight rates. According to IATA, freight revenue could reach a near-record $110.8 billion in 2020, up from $102.4 billion in 2019.
The carrier community has been remarkably flexible in responding to the crisis, introducing new solutions, mostly related to structural changes, such as carrying cargo in passenger seats, passenger plane flights operated solely for the transport of cargo, and finally, the most out of the box solution of all: dismantling of passenger seats in the cabin, necessary in order to make room for cargo.
For example, KLM Cargo and Virgin Atlantic aircraft transport cargo on the passenger seats in the cabin, while in the cabins of Swiss WorldCargo and Finnair aircraft, cargo is placed in the place of the dismantled passenger seats.
These unorthodox practices have paid off, boosting air cargo volumes during the crisis, but not without inconvenience. Passenger aircraft cargo flights are profitable, apparently due to high freight rates and low fuel prices, which can change at any time. Removing passenger seats is a labor-intensive technical procedure that increases airline costs, while loading and unloading in the cabin is a tedious and difficult task, which increases the time spent on loading and unloading. In addition, cargo in such aircraft moves through the passenger doors, which makes their use impractical for transporting large equipment.
Air cargo demand is now largely driven by a shortage of medical supplies – personal protective equipment (PPE), medicines, etc., mainly coming from Asian markets, and the above structural and operational changes are carriers’ bold response to the restriction. carrying capacity in a crisis.
However, according to the latest data from the TAC Index (Air Freight Insights), the demand for PPE worldwide is gradually declining, which could adversely affect the stability of passenger aircraft cargo flights. Freight rates from Shanghai to North America fell 12.8 percent in the first week of June; from Hong Kong to North America, by 12.3 percent; from Shanghai to Europe – by 12.8 percent; from Hong Kong to Europe – by 9.8 percent.
Cargo carriers deliver the necessary medicines around the world
Governments around the world are actively supporting initiatives to deliver personal protective equipment and medical equipment to combat Covid-19. The U.S. federal government launched the Airbridge Project initiative, under which the Federal Emergency Management Agency (FEMA) funds the air transportation of medical supplies. The start of the project marked the importation of 80 tons of PPE from Shanghai to New York. Since the end of March, more than 200 flights with medicines have been carried out. The key participants in the project are UPS, FedEx, National Airlines and Atlas Air.
In the UK, the Department of Health and Social Care (DHSC) has entered into agreements with many British airlines to bring essential supplies to the UK for the National Health Service (NHS). Virgin Atlantic alone is expected to move over 1,500 tons of NHS PPE from China during May-July.
The Government of India launched the Lifeline Udan initiative, which operates flights to deliver essential and life-saving medical supplies to remote areas of the country. The initiative launched in March and since then, carriers have carried out 588 flights, delivering 940 tons of cargo (medical equipment, testing kits, PPE, etc.) by air.
The World Food Program (WFP), the African Centers for Disease Control and Prevention and the Jack Ma Foundation have selected Ethiopian Airlines Cargo to supply PPE to the African region, to more than 39 African countries. As more and more new and effective medicines, vaccines become available, and requirements for medical equipment and tools are determined, air travel will continue to be the most important logistical tool for transporting these critical cargoes.
International freight forwarders find ways to stay afloat
The crisis caused by the Covid-19 pandemic requires unremitting efforts on the part of cargo carriers, and while passenger traffic is almost non-existent, air cargo is gaining momentum to keep the aviation industry afloat. According to an IATA report, air freight accounts for 12 percent of the global air transport market. It is expected that in 2020 the share of air cargo transportation will be about 26 percent.
The exponential growth in the number of air cargo movements has contributed to the preservation of supply chains. Qatar Airways Cargo, working with governments and non-governmental organizations, has already delivered 200,000 tons of essential goods to regions affected by the pandemic. Qatar Airways’ rise in air cargo market share amid the coronavirus pandemic has made it the world’s largest cargo airline.
A B777-300ER Emirates SkyCargo passenger aircraft, the cargo division of Emirates, delivered 66 tons of cargo, setting a new record for the most cargo carried in the hold of a passenger aircraft. Emirates SkyCargo plays an important role in securing the UAE’s food supply and supports the Australian government in exporting Australian products to overseas markets.
In response to the reduction in passenger flights due to the pandemic, Air Canada was the first airline to remove passenger seats to fill the cabin with cargo. The success story of the Air Canada refurbishment soon became a trend, with Swiss WorldCargo, Ethiopian Cargo, IAG Cargo and Finnair Cargo following suit.
In addition, due to increased demand for contactless deliveries and a reduction in staff in the logistics sector due to quarantine, cargo drones have become the focus of the industry.
U.S. medical equipment delivery company Zipline, which develops, designs and operates unmanned aerial vehicles, has announced the launch of America’s first dedicated drone initiative with Novant Health. Zipline drones are being used to urgently deliver critical Novant Health medical products to hospitals.
Drone Delivery Canada (DDC) is partnering with Air Canada to help deliver urgent deliveries to hard-to-reach areas in Canada. One of the DDC unmanned aerial vehicles delivers loads up to 4.5 kg over distances up to 30 km and is used to provide Ontarians with the necessary equipment. Cargo carriers are increasingly adopting unmanned aerial vehicles (UAVs) for cargo operations, and the development and construction of unmanned aerial vehicles is seeing an increase in investment due to the unique role of UAVs to perform fast, contactless last mile delivery.
Air freight is facing many challenges during this challenging time, including the need to go digital in its day-to-day operations. In addition, tariffs are returning to normal, although many countries are still struggling to contain the spread of the virus; The effects of the US-China trade war are also having an impact on carriers. And, importantly, travelers around the world are still experiencing fear of flying and are in no hurry to resume flights. But given the level of resilience and adaptability the airline industry has shown, and the key role it plays in the world’s economy, it’s safe to say that the world won’t be able to emerge from the crisis without it.
International air cargo transportation in Ukraine is successfully carried out by M&M Ukraine (head office in Kiev, subdivision in Boryspil and Odessa) in all promising and popular global destinations. “M&M Ukraine” provides high-quality and safe cargo transportation from European countries to Ukraine, from Ukraine to Europe, to China and to the USA.
Based on www.stattimes.com, www.stattimes.com, www.dronedeliverycanada.com, www.dronedeliverycanada.com, www.aircanada.com, www.aircanada.com and publicly available data.