Shipping companies turn to planes as supply chain rumblings deepen

September 21 — For the giants of maritime commerce, big ships are no longer enough; they also need planes.

The pandemic, which accelerated the shift to online shopping, followed by post-lockdown demand and now war in Ukraine, has scrambled the complex ballet that shipping lines rely on both at sea and in port to deliver goods. goods on time.

Port congestion forced ships to wait at anchor for weeks. The lack of workers to load and unload ships has further slowed deliveries. Empty containers piled up in places with nothing to put in; exporters, moreover, eager to transport their goods, cannot find enough.

The three European companies that dominate container shipping – Denmark’s AP Moeller-Maersk, France’s CMA CGM and Switzerland’s Mediterranean Shipping Co. – have in the past largely shunned air freight as a costly distraction from their global fleet. giant ships, container terminals and related logistics activities.

But years of disruption to global supply chains have pushed many customers to opt for more expensive and more reliable air travel, executives say.

Now these container ship companies are racing into this market.

“For some key customers, airfreight is a must,” said Michel Pozas Lucic, global head of Maersk’s airfreight division.

Auto parts suppliers, apparel makers and tech companies, all of which typically rely on ocean freight to move their goods, had started to go airborne amid fears Covid-related rumbles at ports could disrupt business. just-in-time supply chains or cause them to miss deadlines for new product launches or the start of new fashion seasons.

“You can’t rely on ships alone anymore,” said Abbie Durkin, owner of Palmer & Purchase, a women’s clothing and accessories boutique with three stores in New York City. “I fly through our entire winter collection to make sure it arrives before Christmas.”

Maersk bought German freight forwarder Senator International last year, doubling its airfreight volume.

Maersk has also purchased planes for its air cargo division, formerly known as Star Air.

The division, which for several years has transported freight for United Parcel Service Inc. and Germany’s DHL, operates 15 Boeing 767 freighters. He leases four more and has ordered three more 767s and two 777s.

The air cargo industry grew more than 21% last year from a year earlier, based on a metric measure of tonnage and distance flown, according to the International Air Transport Association, a business group.

Revenue reached $289 billion, compared to $238 billion in 2020 and $264 billion in 2019 before the pandemic.

“E-commerce has grown three to five times faster during the pandemic, and e-commerce centers have been developed across the world,” said Darren Hulst, vice president of trade marketing for Boeing Co. “These centers need a fleet of aircraft to provide the same – same day or next day delivery services.”

IATA expects global air freight to continue growing by 4.4% this year. Strong demand drove freight rates up almost 200% between January and April this year compared to the same period last year.

Over the past three years, 400 freighter planes have been added to the global fleet, a 20% increase, according to Boeing.

The aircraft manufacturer estimates that the world fleet of freighters will increase to more than 3,600 in 2040, compared to around 2,000 currently.

Maersk’s rival CMA and Air France-KLM agreed earlier this year to share cargo space on the companies’ planes.

As part of the deal, CMA also agreed to inject around $400 million into the cash-strapped airline.

The carrier, like much of the commercial aviation industry, has relied on air cargo to help it weather the pandemic travel slump.

CMA also launched its own air cargo division last year and currently operates four Airbus A330 freighters and two Boeing 777s. It will add two more 777s next year and four Airbus A330s to be delivered in 2025 and 2026.

“Shipping and freight, if you can have them together, you have a larger product,” said Air France-KLM chief financial officer Steven Zaat.

MSC, meanwhile, has made a joint bid with German airline Deutsche Lufthansa for ITA Airways, the beleaguered Italian carrier formerly known as Alitalia.

MSC had said the airline could bolster its air travel network, while fueling its cruise business.

Last month, MSC and Lufthansa lost that bid – to a consortium including Air France and Delta Air Lines.

Encouraging change, the economics of shipping is changing.

The price of air freight can be more than three times that of sea freight if the shipment is large and heavy. But for products like computer chips, gadgets and electronics, the difference is less.

Given the rapidly increasing charges imposed by ports and carriers when containers arrive late, airfreight makes sense not only for large importers, but also for small businesses.

For airlines, cargo was a lifeline during the lockdown. For many carriers, this is now a line of business they have decided to pursue.

“In the boardrooms of most airlines around the world, cargo has a more prominent place,” said Air France-KLM cargo manager Adriaan den Heijer. “One of the lessons of the crisis has been, with all the disruption, that we need to make supply chains more robust and resilient.”

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