C.H. Robinson Analyzes the Impact of Corona on Air Freight

The 3PL provider C.H. Robinson analyzes the impact of the Corona crisis on air freight, including in Germany. The logistics service provider based in the USA particularly points out the behavior in the supply chain and alternative transport options.

(Munich) The vast majority of freight is transported in the belly of passenger aircraft and constitutes a large part of non-EU exports. The cancellation of flights due to the COVID-19 crisis led to an estimated 75% reduction in available space in the belly of the planes almost overnight. This posed enormous challenges for the industry and traders: they had to fit their goods into a cargo plane or a newly assigned passenger plane or quickly find new storage space. The latter proved to be very costly, as our observations show that these storage spaces would ultimately be about ten times more expensive than before COVID-19. The elimination of regular goods transport in passenger planes means that we may not return to significant numbers until 2022.

Impact on Germany

The effects of this capacity reduction have a tremendous impact in Germany. Manufacturers must consider other options in the medium term than transporting their goods exclusively by air. Although the influence of external factors on air freight is now shaped by Covid-19, other changes and regulations must also be taken into account in the future. Stakeholders along the supply chain need to explore alternative modes of transport to secure themselves in the long term. An efficient and cost-saving approach is the multimodal mix with active and permanent integration of road, sea, and rail transport into the supply chain.

A Series of Challenges for Manufacturers

First, the pressure on the air charter sector. The sharply increased demand has led to a rise in prices – although these seem to have decreased as passenger traffic has resumed. However, capacity in this area cannot be relied upon consistently. Regular maintenance due to the significant use of aircraft in the spring could reduce capacity and drive prices up again.

Secondly, both passenger and charter capacities could be reduced by the emergence of vaccines that need to be shipped quickly around the world in addition to the ongoing demand for PPE equipment. Combined with major product launches for technology companies looking to capitalize on the pent-up demand for products like the iPhone 12, the new Sony PS5, and other consumer goods, this could mean that the logistics teams of manufacturers and retailers once again rely on skill or luck to transport freight like highly demanded consumer goods to their customers.

Considering Alternative Transport Options

Therefore, all parties involved in the supply chain must consider alternative transport options to ensure long-term security. An efficient and cost-saving approach is the multimodal mix with active and permanent integration of road, sea, and rail transport into the supply chain.

The active integration of alternative carriers into the supply chain not only makes it more flexible but also more attractive in terms of efficiency and costs. Such supply chain management only works if all available data from all carriers are included in the planning. This simplifies collaboration between manufacturers and carriers, minimizes the number of kilometers traveled, and reduces empty runs. The capacity of the shipping industry is also changing due to more larger ships, leading to greater choice and lower rates.

“Even if our ‘new normal’ may not be defined for a while, logistics technology companies play a fundamental role in analyzing data, integrating new innovations into the supply chain, and understanding the requirements that manufacturers and retailers will have in realigning their goods transport methods in the future,” says Andre van Linden, Air Product Manager Europe at C.H. Robinson.

C.H. Robinson

As one of the world’s largest external logistics providers (Third-Party Logistics Provider, 3PL), C.H. Robinson offers a global network and a wide portfolio of logistics services, sourcing of fresh produce, and managed services. C.H. Robinson is one of the leading freight forwarders and road transport companies in Europe and has a dynamic branch network throughout the region. The team members in Europe speak many languages, are skilled at building relationships, and are focused on serving customers optimally. The company, the foundation, and the employees make annual donations to a variety of organizations worldwide. C.H. Robinson is headquartered in Eden Prairie, Minnesota, USA, and is listed on NASDAQ (CHRW).

Photo: © C.H. Robinson

www.chrobinson.de