TRANSPORT AND LOGISTICS
lockdowns, with factories and shops closing everywhere, the economic forecasts were negative. And this had an effect on airfreight demand. In theory, at macro level, consumers buy less, which means companies buy less, which means suppliers produce less, which means that less is shipped. So, from an economic perspective, one could predict that the demand would almost certainly be down.
But there was another dominant perspective in this specific case during 2020: the public health factor. Almost from the moment COVID-19 emerged, it became clear that it was a highly infectious virus, meaning a crucial component of the safe treatment of an infected individual was the use of personal protective equipment, or PPE. In this context, that meant face masks, shields and gowns. But what nobody ever expected was the quantity of PPE needed to cover universal usage and for a long period of time. That meant that, in order to reduce the risk of people exposure, every hospital in the world needed more PPE, much more. So, we saw that the number-one medical PPE-producing country in the world was also the first country to experience COVID-19: China. Before the pandemic, the country produced 20 million medical masks per day, or about half of the world’s supply. By the beginning of March, though, this had already been scaled up to more than 100,000,000 per day. And it was at exactly this time when, simultaneously, China’s manufacturing industries started to go back to life and the virus truly took hold of the rest of the world. It was mainly Europe and the US that needed supply from China and other manufacturing hubs as fast as possible. In the logistics world, as fast as possible means airfreight.
Due to this unprecedented and urgent demand
“The number-one medical PPE-producing country was China. It was mainly Europe and the US that needed supply from China and other manufacturing hubs as fast as possible. In the logistics world, as fast as possible means airfreight.”
64 | Clinical Trial Supply Handbook
for PPE and other medical supplies, the demand for airfreight only dropped by 15% in March 2020. And considering that the air cargo capacity (available space) dropped by 23%, there was an 8% gap between supply and demand. But in the context of this industry, even this percentage was huge, and so the laws of supply and demand reacted. The cost to transport goods by air spiked, especially in the key Asia to US and Europe markets. In the last two weeks of March 2020, airfreight rates from Hong Kong to North America jumped 27% above normal, while rates from Shanghai to Europe increased by 50%. Of course, after a supply and demand mismatch, economic forces push companies to increase supply, which is exactly what happened. Cargo airlines increased their flights. Some cargo airlines brought aircraft out of storage and increased their long-haul flying by nearly 50%. However, those ones that had extra capacity to offer were passenger airlines, and that’s when a solution emerged. Remember that a plane with no passengers is not necessarily an empty plane. So, those airlines that were having their aircraft parked and unused soon realised that there was a possibility of turning a profit flying a passenger plane with no passengers. With no passengers on-board, airlines quickly adapted themselves to carry cargo and make their aircraft useful, instead of having them unused and parked. And many airlines have loaded their passenger cabins with cargo, in some cases changing the internal structure configuration of their planes by removing seats. Immediately, some airlines began cargo-only flights. This also created flights that have never happened before – like 16 hours non-stop cargo-only trips from Sydney to Toronto. And not only just big airlines on long flights. Smaller airlines got in the game, too. Greenland, for example, started an air link on a small propeller aircraft to transport COVID-19 tests for processing in a Danish laboratory.
What other knock-on effects of the pandemic have affected the aviation industry? And how are current border and travel landscape affecting airfreight operations? The global airfreight demand is usually directly linked with the global economic development of countries. Today, we are talking about the importance of the airfreight industry for
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