Subscription Required

By Judson Rollins

Introduction

October 18, 2021, © Leeham News: Much ink has been spilled over the surge in demand that has washed over every corner of the cargo world: air, sea, road, and rail.

Amazon Air's first parcels being unloaded at Amazon.com's new Cincinnati (US) sort hub. Source: Amazon.com.

Before the COVID-19 crisis, air transport was reserved primarily for items with high value and/or time sensitivity, such as laptop computers or express documents. And growing competition in the cargo market meant that average yield (revenue per ton-mile) was declining by more than 2% per year, according to past editions of Boeing’s World Air Cargo Forecast.

But now the cost of sea transport has exploded, shifting a significant chunk of cargo from ocean freighters to their airborne equivalents. This is driving some retailers to use air transport. Home Depot, an American home-improvement retailer, is resorting to air freight to bring in smaller, higher-value items like power tools that it needs to keep on the shelves at all times.

Even before COVID-19, a growing share of air freight has come from e-commerce — thereby shifting the volume-to-weight considerations relative to “traditional” freight.

Will these trends continue even beyond the COVID crisis? And what impact will it have on the market for factory-built freighters and passenger-to-freighter (P2F) conversions?

Summary

• Soaring sea freight yields mean small shipments are now more economic by air than sea.
• Volumetric capacity matters more than max gross weight.
• New freighter options will compete with a glut of conversion feedstock.
• Air freight yields will eventually revert to historical trendlines in most regions.