Ocean Shipping Lines Turn to Planes as Supply-Chain Snarls Deepen

September 21 – For the giants of maritime trade, large ships are no longer enough; You also need planes.

The pandemic, which accelerated the shift to online shopping, followed by demand from the lockdown and now the war in Ukraine, upset the intricate ballet that shipping companies, both at sea and in port, rely on to deliver goods on time deliver.

Port congestion has forced ships to wait at anchor for weeks. A shortage of labor to load and unload ships has further slowed deliveries. Empty containers have been stacked up in places, into which nothing can be put; Exporters elsewhere, eager to ship their goods, can’t find enough of them.

The three European companies that dominate container shipping – Denmark’s AP Moeller-Maersk, France’s CMA CGM Group and Switzerland’s Mediterranean Shipping Co. – have historically viewed air freight as an expensive distraction from their global fleet of giant ships, container terminals and more shunned related logistics companies.

But years of global supply line disruptions have prompted many customers to opt for more expensive — and more reliable — air freight, executives say.

Now these container shipping companies are racing in this market.

“Air freight is a must for some key customers,” said Michel Pozas Lucic, global head of Maersk’s air freight division.

Auto parts suppliers, apparel makers and tech companies, all of which normally rely on ocean freight to move their goods, had begun switching to air over fears the Covid-related snarl at ports would disrupt or cause just-in-time supply chains would you miss deadlines for new product launches or the start of new fashion seasons.

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“You can’t just rely on ships anymore,” said Abbie Durkin, owner of Palmer & Purchase, a three-store New York women’s clothing and accessories boutique. “I fly in our entire winter collection to get there before Christmas.”

Maersk bought the German air freight forwarder Senator International last year, thereby doubling its air freight volume.

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

The division, which has flown cargo for United Parcel Service Inc. and Germany’s DHL for several years, operates 15 Boeing 767 freighters. She leases four more and has three more 767s and two 777s on order.

According to the International Air Transport Association, a trade group, the air cargo industry grew more than 21% year over year last year based on a metric measuring tonnage and distance flown.

Revenue was $289 billion, up from $238 billion in 2020 and $264 billion in 2019 before the pandemic.

“E-commerce grew three to five times faster during the pandemic, and e-commerce centers have been developed around the world,” said Darren Hulst, vice president, commercial marketing at Boeing Co. “These centers require a fleet of aircraft to support this.” to ensure -day or second-day delivery service.”

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IATA expects global air freight to grow another 4.4% this year. Strong demand caused freight rates to increase by almost 200% between January and April this year compared to the same period last year.

In the last three years, the global fleet has grown by 400 cargo aircraft, a 20% increase according to Boeing.

The aircraft manufacturer estimates that the global freighter fleet will grow from around 2,000 at present to more than 3,600 in 2040.

Maersk competitor 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 pump about $400 million into the cash-strapped airline.

The airline, like much of the commercial airline industry, has relied on air freight to weather the pandemic’s travel crisis.

CMA also established its own air cargo division last year and currently operates four Airbus A330 Freighters and two Boeing 777s. It will add two more 777s and four Airbus A330s over the next year, with deliveries in 2025 and 2026.

“Shipping and freight, if you can have that together then you have a broader product,” said Steven Zaat, Air France-KLM’s chief financial officer.

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

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MSC had said the airline could strengthen its airship network while feeding its cruise business.

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

In order to promote change, the economics of shipping are changing.

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

Considering the rapidly increasing fees charged by ports and freight forwarders when containers arrive late, air freight makes sense not only for large importers but also for smaller companies.

For airlines, cargo has been a lifeline during lockdown. For many airlines it is now a line of business they have decided to pursue.

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


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