Peak season is slated to spark another hectic stretch for air carriers, with shippers looking to expedite freight over congested U.S. ports to meet holiday deadlines. But some retailers already made arrangements to ensure their goods arrive on time, be it by chartering ships or simply shipping inventory earlier if they have the space for it.
Additionally, the inflationary environment and heightened shipping costs may make some retailers think twice about using air transportation over ocean.
“One of the roadblocks is the strong increases in prices, both for businesses and consumers,” the International Air Transport Association said in a September analysis.
Still, air transportation today is a better deal than it was pre-pandemic. According to IATA, in September it was three times more expensive to send a kilogram of chargeable weight using air versus ocean, compared to 12.5 times more expensive pre-pandemic. And data from Freightos shows ocean freight rates were more than seven times the pre-pandemic norm at the end of October.
“The upshot is that trade and manufacturing activity are impacted by supply chain issues, but air cargo benefits from its speed, which helps meeting peak season demand and will allow it to continue to overperform global goods trade,” IATA said.
Congestion at U.S. ports and COVID-19-related factory closures have some companies willing to accept the higher price.
Colgate-Palmolive in Q3 decided to ship product via air to mitigate the impact of plant closures and ensure enough supply would be available for retailers, despite the “significant cost,” Noel Wallace, its chairman, president and CEO said in an October earnings call.
Crocs is committing more to air transportation after factory closures in Vietnam forced it and other retailers to miss several weeks of production. The company is on pace to spend $8 million to $10 million on airfreight this year, which is normal, said executive vice president and CFO Anne Mehlman on an earnings call.
Looking ahead to 2022, Mehlman said the company is planning $75 million on air transport spend to bring in product for the Spring and Summer selling season.
Post time: Nov-12-2021