\
However, it’s not all bad news for those who have the foresight to future-proof their business; even in these troubled times, many realise the key to the future success of the air cargo industry is going to depend on stakeholders’ agility throughout the supply chain to adapt with speed and have the ability to form critical partnerships. While there are no guarantees, specific strategic planning and informed risk-taking have never been more valuable than it is right now. Interesting time ahead, in that there can be no doubt.
What do we know?
It has been widely reported over the weekend that Boeing has sought to raise $25 billion by selling bonds in order to shore up its finances. This means the company will not seek assistance from the US government. Boeing is the world’s leading aircraft maker and before COVID-19 was America’s leading exporter of goods. The $80 billion-dollar company has shut assembly lines as the virus has stopped the demand for new passenger jets. Boeing said this week that it would cut 16000 jobs worldwide or 10% of its workforce and would reduce passenger aircraft production unless something changes in the forecast. It is widely reported that a loss of $628 million dollars has been made, with Boeing advising they have spent $4.7 billion in the first quarter trying to stay afloat.
What does this mean to the future of air cargo?
Unsurprisingly the future of air travel for commercial airlines is hanging in the balance across the board and governments worldwide are providing state aid where required, many companies are entering into a debt-for-equity arrangement. In these unprecedented times, unprecedented measures are taking place to ensure that the industry can recover as soon as possible. One thing we do know is, when one door closes another opens.
The value of E-Commerce
It is no surprise that E-commerce has long been a significant industry, as more and more consumers opt to buy their shopping online. Amazon, one of the world’s largest mail-order firms, has seen demand grow, and shipping costs associated with that have increased the company’s shipment costs. Amazon was spending over $14 million on shipping goods to consumers in the US during 2018. Boeing is backing up shipping prices, citing figures of nearly $2 trillion in shipping costs during its 2017 financial year. By 2021, Boeing estimates that this figure will have risen to $4 trillion with 17.5 per cent of the global market share. Amidst the effects of lockdown, Amazon share price has gone up to $6.47 a share in the quarter, up from $6.04 a year earlier – proving the point succinctly.
Adopting All-In Rates
All-in prices are a major factor in the air cargo industry’s drive for openness and simplified pricing; not always popular but increasingly requested. This is not where creativity will end but where profitable adjustments can be made. Airlines and shippers need to take advantage of available data to have precise long-term pricing; embracing technology would allow customers to get all-in prices in seconds from parcel shipping websites and this, in turn, will increase turnover as visibility is an underrated marketing tool and inturn create another revenue stream vital to the beleaguered market.
Working With Emerging Markets: India, Asia and Africa
Royalty-free stock photo ID: 676802881
E-commerce and air freight are now well developed in the west, but this is not the case everywhere. There are a variety of countries in emerging economies such as India, Asia and Africa that have only recently got their foot in the air cargo industry’s door and are now increasing their air cargo shipping loads. Africa particularly has not been as badly affected by the virus and in some instances is overtaking other emerging markets. Early adopters would do well to keep an eye on Africa as the infrastructure improves and investment continues, commentators say this market could easily compete with others and possibly overtake rivals by the end of 2022.
Some good news
Boeing has reported that airlines have cancelled orders for new planes as a result of the pandemic, however, the private jet industry has reported an increase in business by 20% since the beginning of the outbreak, giving commentators a new route for discussion towards the future of air cargo.
