The ocean freighters industry has been in a state of crisis for two years. The war in Ukraine has made shipping even more complicated.
Demand for air cargo is rising in the midst of shipping issues. The International Air Transport Association says that air cargo volumes rose in the year 2021. The group didn't have data for 2020.
Old passenger planes are being converted into freighters.
Over the last three decades, some 50 to 70 passenger-to-freighter conversions took place each year. AeroDynamic said it expects conversions to double to 180 a year by 2025.
The growth of e- commerce and the inefficiency of shipping are some of the reasons why air cargo is still growing.
The cost of transporting goods via air cargo is more expensive than shipping, and the consumer may be the one paying the difference.
The shipping industry crisis has been caused by a global labor crunch and operational issues related to vaccine recognition and border controls.
According to the International Chamber of Shipping, 15% of seafarers are Russian or Ukrainian. Sanctions against Russia could make it difficult to pay staff, and it could become more difficult to recruit Ukrainian seafarers because the country has banned all male citizens from the ages of 18 to 60 from leaving the country.
Air freight has become an appealing alternative for smaller, expensive items like food and chips.
The head of consumer sector equity research at Tellimer said that air cargo volumes have been rising as the global economy recovers.
Roughly 2% to 3% of the world's trade by volume is transported via planes, but it represents less than 3% of the global trade value.
Air freight is four to six times more expensive than ocean freight, which is the majority of the world's traded goods. Jet fuel prices hit 14-year highs earlier this month. Tiruchelvam said that the increased cost of air transportation will cause inflation.
The trouble for the consumer comes from that.
As companies look to recover from the hit their earnings took during the Pandemic, it is likely that they will pass the cost to end users.
Fresh produce is one of the products that could be air-flown more due to supply chain disruptions.
A typical airline business makes about 30% of its revenue from cargo. According to an IATA report released in May, that has gone up from 10% to 15%. The cargo capacity last year was 10% less than in the year before.
Cargo capacity in passenger planes has been slashed because of the Pandemic.
It is more cost-effective to convert an old passenger plane to a freighter than it is to acquire new cargo planes. Buying and converting an old passenger plane can cost tens of millions of dollars, but a new freighter can cost hundreds of millions of dollars.
Demand used to come from dedicated cargo companies, but passenger airlines are also entering the space, Yusof said. Alaska Airlines, the fifth-largest airline in the US, announced last week that it was converting two of its narrow body Boeing planes into cargo planes. The carrier said it has converted three smaller planes to cargo.
One company that has seen a big boost in its conversion services is Israel Aerospace Industries. It converted about 18 aircraft a year. 25 aircraft were converted last year.
As our society has become more accustomed to online shopping, we expect to see a continuous upward trend in the need for cargo planes and for the most cost-effective solution.
Business travel may not return to pre-pandemic levels as passenger airlines shift toward more cargo services.
He told Insider that there will be increasing demand for aircraft to be converted into cargo. The aviation landscape has changed.
All Rights Reserved © 2024
