Air freight providers should have benefited from the urgent, worldwide need for personal protective equipment, medical devices and other components. But is it as simple as that and what is the outlook for the industry in Latin America?
Firstly, it’s important to understand that air freight travels in different ways. Heavier loads must go on cargo planes, with reinforced floors and more powerful engines, but lighter loads are frequently added to commercial flights. Prior to the pandemic, medical supplies were mostly shipped by ocean, but as the urgency for medical supplies grew, air shipping rapidly became the preferred approach.
The fall in air passenger transport activity initially introduced a sharp decrease in air cargo capacity on commercial flights, causing air freight prices to rise.
“The biggest challenge for commercial airlines is whether transporting cargo will be enough to meet their operational costs.”
Engineering lead, Safran Mexico.
In response, Latin American and US carriers began retooling passenger aircraft to carry air freight, which is rapidly expanding air freight capacity. A senior engineer at Safran Mexico confirms, “We have received enquiries from commercial airlines operating in Latin America (e.g. Qatar Airways) trying to understand if aircraft ordered at the start of the year could change their finishing to enable the carriage of cargo.”
This increasing capacity, together with low fuel prices, is causing prices to fall and our sources believe that the low margin air-freight industry will be squeezed in the coming 12 to 24 months. The Safran engineer said, “The biggest challenge for these companies is whether transporting cargo will be enough to meet their operational costs.”
What about a potential surge in cargo activity from vaccine distribution? Our source at Safran doesn’t think this will help the cargo industry, “We will not be producing additional engines for cargo planes in Latin America, which most likely indicates that governments will be using commercial airlines to transport vaccines.”
“We are already operating at 100% of our capacity and we are not yet transporting the vaccine!”
Commercial Manager, LATAM Cargo.
To reinforce this point, a Commercial Manager at LATAM Cargo adds, “We have been told that any vaccine would come to Latin America by air, and it will take more planes than the market has to reach all of The Americas.” The source assures that LATAM Cargo will put all available planes at the ready.
Looking at the coming months the manager at LATAM Cargo continues, “We are hoping that the vaccine does not arrive at the same time as the new iPhone, Xbox and Playstation, these are already overdue and due to demand will also be transported by air.”
Of course, a spike in demand means prices will only go in one direction, “Prices are going to increase, just like when COVID started, we don’t have an estimated date for a vaccine but we’ve been told to be ready from October.”