Curtis Spencer, CEO, & Steve Schellenberg, Senior Vice President, Logistics and Business Development, IMS Worldwide

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Curtis Spencer

The COVID-19 pandemic has forever changed the air cargo industry. With over 60 percent of all belly freight capacity still grounded, we all have a very long way to go!

Forwarders, previously fanatical about traditional gateways, are now moving to a point-to-point strategy and using charter or leased aircraft to support specific lanes where they control density and volumes. Several global ocean carriers — most notably, Maersk and CMA CGM — are developing logistics services platforms to be “all things to all shippers,” and they are including air cargo services to avoid giving up control of any cargo types or cargo--related services for their customers.

Overwhelmed with global supply chain challenges, the automotive industry continues to embrace an entire “powertrain transition” by partially and slowly modifying their internal combustion engine systems as they shift toward new electric vehicle (EV) platforms. Performing both transitions while dealing with the loss of lift capacity in belly cargo has the automotive world in chaos right now.

Amid this complete lack of predictability, another tsunami of air cargo volumes is emerging from international “de minimis” cargo. Amazon has created two East Coast gateways — Newark, New Jersey, and Lakeland, Florida — that, combined with the company’s Cincinnati hub, will receive high volumes of low-cost European goods purchased by US consumers on Amazon’s marketplace. This is the first automated, high-volume Section 321 initiative. Amazon currently serves eight EU countries and can position goods into US homes within 48 hours of purchase.

Alibaba and logistics partner Cainiao predict over 1 billion packages per day will be distributed through their network. Cainiao has announced global gateways in five cities. However, they have not yet indicated airport selections in the US. It is clear that traditional cargo gateways cannot handle additional volumes at their congested ramps and facilities, most of which are three to four days delayed in offloading and delivery. Thus, alternative gateway airports will likely be Alibaba’s preference.

We predict that the air cargo industry will not reach a state of normalcy for five to six years, maybe longer. The changes witnessed in logistics and air cargo today will pale in contrast to the challenges we will face over the next five years.