EconomyFinancialNeither by train nor by ship: the shortage of...

Neither by train nor by ship: the shortage of containers boosts air cargo

The industrial reactivation around the planet, after the drastic closure at the beginning of the pandemic, has generated imbalances in the demand for goods and operational challenges in freight transport service providers, especially by sea, where more than 80% of the products, according to the World Trade Organization.

The air cargo sector has positioned itself as an alternative to the increased demand generated by the reactivation and new consumption habits. Until before the pandemic, the International Air Transport Association (IATA) expected a 10% annual growth in e-commerce air cargo between 2019 and 2025.

For that year, e-commerce would be worth 4.4 billion dollars; however, covid-19 paid for this goal to be reached in 2021, according to the study A new era for air cargo , published by IATA. The document highlights that online retail growth exceeded expectations in some regions. In particular, Latin America, the Middle East and Africa, which lagged behind most mature markets before 2020, advanced years in terms of e-commerce volume.

The phenomenon boosted the participation of e-commerce in air cargo to 18% until March 2021 and, according to IATA, this year it will reach 22%; which, without a doubt, will favor specialized cargo airlines. Mas Air, for example, grew 77% for merchandise transported in the domestic market, and 78% in the international market, while Estafeta grew 19% and 21%, respectively, in the same markets.

The expectation of the item has driven the plans of both airlines. Mas Air outlined a plan to add 10 more aircraft to its fleet by 2025, and Estafeta wants to increase its capacity by 20% this year, by renewing two 737-400 aircraft to replace two 737-300 teams.

Virginia Gallardo, director of the Air Work Group of the Mexican Cargo Association (Amacarga), affirms that companies have seen in air cargo an opportunity to overcome the delays registered by maritime transport in recent months as a result of “the lack of of containers and the excessive costs” that its transfer implies, which is between 100 and 200% more expensive. “Capacity in the face of supply and demand is definitely very scarce,” he says.

The Mexican Council for Foreign Trade (Comce) estimates that the cost of sea freight arriving in the country, particularly from Asia, has tripled in the last couple of years, which has played in favor of the air sector.

“Sea transport is still cheaper than air transport, but manufacturers have also decided to promote air cargo because it allows for faster mobilization,” explains Fernando Gómez Suárez, an air sector analyst. “It’s more convenient because it also implies high customer satisfaction, in line with their expectations.”

The demand for air cargo service has also benefited commercial airlines. Aeroméxico – one of the main commercial companies in the category – increased its cargo revenue by 16.8% between 2019 and 2021, the year in which it closed at 4,934 million pesos and concentrated 10.9% of total revenue, in contrast to 6.1 % of 2019.

Similarly, Volaris revenues rose 5% in the last couple of years, closing at 241 million pesos, and Viva Aerobus launched its cargo service in early 2020 in the domestic market. Since August 2021, it also attends the international one. Gómez Suárez affirms that these movements are also due to the market response to the departure of Interjet, which in 2019 was the third largest competitor in the cargo segment at the national level, only behind Aeroméxico and Estafeta.

“Volaris and Viva Aerobus absorbed part of the market left by Interjet, but the one that takes most of it is Aeroméxico. (…) If the upward trend continues, they will have to adjust their capacities”.

In the long term, IATA considers that the strategy of logistics operators to build distribution centers that are increasingly closer to large cities reduces the expectation in the demand for air cargo service. Gallardo, from Amacarga, maintains that while the crisis in the supply chains continues, there will be gaps to fill. “As long as the situation of port saturation and lack of containers remains, air transport will be in a good position,” he remarks.

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