'A weekly staple in our house is bananas and most weeks buying bananas is uneventful. As the primary grocery shopper in my family, I typically look for bananas transitioning from green to yellow. Maybe they won’t taste great today, but within a day they should be ready to eat and we’ll have most of the week before the brown spots start to form. Occasionally I will be forced to choose between bananas that are either too green or too ripe. I know the ripe bananas may only take a day or two to develop those dreaded brown spots – making them inedible for my young children – but I tend to choose those over the bananas I consider too green.
This is a pretty good comparison for how it feels to give air freight market updates lately. Providing these updates is one of my responsibilities at C.H. Robinson and normally a straightforward task. Over the past few months, however, I feel like I’m buying a banana that is too ripe. In the days following a new market update that I’ve created, I’m looking for brown spots.
With that in mind, let us examine some of the mid to long-term impacts of COVID-19 on the air freight market. Many shippers and forwarders are wondering when we might return to a “normal” market condition and there are many factors that will come in to play. One of the most significant is demand for travel.
Each lane is different, but passenger flights make up a large portion of air freight capacity globally. As demand for air travel steadily increased over the years, airlines have responded with more passenger aircraft to support this demand. This additional equipment increased cargo capacity, even in years where demand for air cargo did not increase at a corresponding level.
With cargo capacity (supply) increasing faster than demand, many airlines operating both passenger and freighter aircraft reconsidered their need for freighters. Some airlines got out of the freighter aircraft market altogether, while others chose to let aging cargo aircraft retire without replacing them.
As a result, when the demand for passenger travel plummeted in the wake of the COVID-19 pandemic, a dramatic reduction in cargo capacity followed. As more countries issued various “stay-at-home” measures, air cargo demand fell, but not to the same level as capacity. This has resulted in congestion and increased rates globally with some lanes more affected than others.'
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