The COVID-19 pandemic has had an unprecedented impact on all aspects of the logistics market. Air transportation of clinical supplies is no exception. While the coronavirus outbreak created an additional demand for vital medical supplies to be shipped internationally, it has also simultaneously reduced the number of passenger jets available to carry this cargo.
Although most European countries have been re-opening their borders since mid-June, global air traffic is not expected to return to pre-СOVID levels anytime soon. With health experts stating the pandemic to be far from over, this situation could have far-reaching implications for clinical logistics companies. This presents not only challenges but also some unexpected opportunities for the industry.
How exactly has suspension of passenger air travel affected logistics companies? Aren’t they supposed to rely primarily on cargo aircraft?
Before COVID-19, logistics providers relied heavily on passenger aircraft for transporting international air cargo. In fact, around 40% of annual global air cargo is typically transported in the bellyhold of passenger aircraft. The other 60% is transported by freight and cargo operators: these are usually hub-based and operate on established trade routes in comparison to the extensive network provided by passenger airlines.
Since the beginning of the coronavirus crisis, passenger aircraft cargo capacity has dropped by 80% — this figure translates into an enormous amount of unshipped medical supplies. The capacity squeeze has had the effect of driving up freight forwarding fees and thereby increasing the cost of cargo transportation. In some cases, these fees have even tripled. Quarantine measures have also negatively affected delivery timelines: in certain countries, goods were quarantined while crews and aircraft were being forced to self-isolate for a period up to 14 days. These restrictions typically led to massive delays in transportation of cargo.
Logistics companies have been grappling with all of these issues from the moment travel restrictions were introduced. As the crisis has continued, several airlines have helped to address these issues by employing their passenger aircraft for cargo-only international flights. This is a positive development as it keeps planes in the sky and helps logistics providers with the capacity issues they continue to face.
What other trends for transportation of clinical cargo are expected to emerge in the near future?
One upcoming trend is the increasing popularity of combined cargo. This type of cargo allows several market players to participate in group shipments on mutually beneficial terms. Especially high demand for combined cargo is observed in European countries.
Another emerging trend in respect to transportation of clinical cargo is the increasing role of land transport. Due to the high volatility of rates on air transport, it’s likely we will see a redistribution of volumes towards rail and road, especially on routes from Asia to Europe. Overall, we expect logistics companies to rely less on air and more on other methods of transport, such as road, railway and, albeit to a lesser extent, sea.