Many household goods shipping companies are investing in air travel
As shippers look for more efficient ways to ship household goods worldwide, ocean freight companies are increasingly turning to air cargo. Although airfreight represents only a tiny section of the broader cargo industry, the pandemic has caused it to become more prominent due to supply chains, travel bans, and consumer spending issues.
Air travel has become increasingly important for companies engaged in maritime trade due to the recent pandemic. With more people shopping online, household goods shipping companies are struggling to keep up with demand. This has caused ships to be idly anchored at congested ports, unable to dock for weeks at a time. Further complicating matters is a shortage of workers assigned to load and unload vessels. Containers that could be used to hold exports are instead sitting unused, while exporters with plenty of goods to ship need help to get containers.
The three dominant European container shipping companies (AP Moeller-Maersk, CMA CGM Group, and Mediterranean Shipping Co.) have primarily avoided airfreight, feeling that it is an expensive distraction from their core businesses of operating giant vessels, container terminals, and related logistics operations around the world. However, executives claim that many customers are now opting for air shipping because it is more cost-effective and reliable. Maersk, the world’s largest container shipping company, began an air cargo division in April last year and now has a fleet of 15 planes.
Ocean Freighters Turning to Buy Air Planes
Boeing and Airbus are now part of this equation as they started selling freighter versions of their newer widebody planes. These freighters are more fuel-efficient than older cargo jets. And to show the rising demand for converting old passenger planes into freighters, it should be noted that some have been booked up for years.
In recent reports, Maersk is anticipating free cash flow to be about $19 billion by the end of 2022. The company plans to obtain seven Boeing 767s (purchase three and lease four) by the new year. The idea would be to have aircraft fly routes between Asia, the United States, and Europe.
Last year, Maersk moved into the air cargo game and increased volume by 100% after purchasing German air freight company, Senator International. In addition, Maersk has been buying airplanes for its air cargo division, which was formerly called Star Air. The division, contracted by United Parcel Service Inc. and Germany’s DHL to fly freight, now operates with 15 Boeing-made 767 freighters.
Also, earlier this year, CMA CGM, the world’s third-biggest ocean shipper, agreed to share cargo space with Air France-KLM. And on top of that, CMA CGM said it would buy a 9% stake in the airline.
Numbers released by the International Air Transport Association (IATA), last year, the airfreight industry grew over 21%. This means that revenue will increase to $289 billion in 2022, up from $238 billion last year.
Boeing reported that about 400 freight planes had been added to the world fleet in the past three years. This is an eye-opening 20% rise. Boeing is now estimating that the global freighter fleet will increase to about 3,600 by 2040. To put that number in perspective, it is currently around 2,000.
How Increased Airfreight Will Affect Global Mobility & Relocation Industry
In the past, airfreight for relocations was too expensive, and many relocation companies didn’t even consider it an option. However, the lowering costs and the congestion of ports have now made a more realistic answer for many.
As airfreight rates become more affordable, international relocation companies can choose to ship household goods by air. With more employers turning to lump sum packages for relocations and ocean shipping delays being a common factor, transferees are leaving more of their belongings behind when they move abroad for a work assignment. The fewer belongings the employee brings means the quicker they can move, meaning the more likely they are to choose airfreight for their next relocation. Although the airfreight method is still quite costly, it eliminates many relocation delays, significantly improving the transferee’s experience.
Global Mobility Solutions (GMS) is the industry leader in Global Mobility, which is why we stay on top of all topics regarding relocation. Visit our Knowledge Base to learn more about hot topics in the relocation industry. And feel free to reach out to us with any questions regarding the household goods shipment.
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Ann Knapp | CRP, GMS, CMC
Director, Transportation Services Ann has over 20 years of leadership experience in the moving and relocation industries. She is a council member for the International Association of Movers (IAM) Leadership Alliance. As a 2nd generation mover, Ann has worked in all areas of the industry from survey scheduling to claims settlement which has provided her with a well-rounded understanding of the ins & outs of moving. Ann is responsible for the day-to-day operations of the Transportation Team, the GMS Transportation Network, managing contracts, policy advisement, and monitoring quality.
