Air freight demand grows even as supply bottlenecks ease

The use of air freight soared during the coronavirus pandemic, as shippers leapfrogged over bottlenecks plaguing surface transport networks to get their goods to free-spending consumers. Yet even as those bottlenecks start to ease, demand for planes to move cargo is still growing. The trend is squeezing shippers’ bottom lines, lifting the fortunes of airlines and boosting the most carbon-intensive form of freight transport. Global air passenger traffic is forecast to be about a fifth lower than 2019 levels in 2022, according to the IATA. Yet air cargo volumes will be 11.7% higher than in 2019, and 4% more than in 2021, the airline trade group estimates. How long reliance on costly air shipments lasts has become “a multimillion-dollar question”, said Todd Ingledew, chief financial officer of luxury brand Aritzia. The Canadian company forecasts its profit margins will be as much as three percentage points lower this year than last due to higher costs from expedited air freight from overseas manufacturing sites, he told analysts earlier this month. Levi Strauss, the jeans manufacturer, said higher air freight costs “to support delivery of seasonal merchandise” took 0.8 percentage points off its gross profit margin in the latest quarter, while Lululemon Athletica’s margin guidance for its current quarter included 1.5 percentage points of “pressure from air freight costs due to port congestion and capacity constraints”. Air freight is much more carbon-intensive than shipping by sea. In 2019, ships moved nearly 350 times more cargo than planes but accounted for only five times more carbon dioxide emissions, according to the International Transport Forum. But air freight is faster and has proven more reliable than alternatives as ports have been backlogged, truck drivers have been scarce and warehouses have filled up during the pandemic. Demand lept ahead of last year’s holiday season as retailers scrambled to stock shelves.<br/>