Inbound Logistics | November 2022

Americans planned to “go big” for their next vacation. What it adds up to is greater belly capacity, but less of a need for it. “We’ve seen a real shift in consumer behavior toward service-oriented experiences as opposed to product- oriented experiences,” says Shah. “Demand for air cargo could stagnate through 2023.” There’s a forecast of clear skies, with a slight chance of headwinds for air cargo markets. n

“Our air cargo operations grew 16% from 2020 to 2021,” notes Jim Szczesniak, chief operating officer for the Houston Airport System. “It was a result of the ‘Everybody’s buying stuff from their couch’ phenomenon. Passenger traffic took a nosedive during that time, but now it’s returning.” Loosening restrictions on travel means that budgets are once again shifting toward vacations and restaurants. According to travel website Expedia’s 2022 Travel Trends Report, 68% of

Meanwhile, capacity nearly reached pre-COVID levels during the summer of 2022 in the trans-Pacific, according to IATA. Between flagging demand for goods and lower instances of ocean conversions, cargo space has been consistently available. That said, “the market can and has shifted on a dime in the past 18 months,” says Chi. One example of this is “zero-COVID” policies. While countries like Japan have reopened for international travel, China continues to pursue policies to check the spread of disease. As of October 2022, the U.S. Embassy to China warned that all travelers are subject to a minimum 10-day quarantine upon entering the country. This discourages travel, which, in turn, reduces the number of flights to or from the region. “Think about how many business people, or families, fly to Asia every year under normal circumstances,” Chi explains. “That has almost come to a halt. Airlines are operating fewer flights to the region as a result. Why would they want to operate such an expensive plane if it is almost empty?” GOODS DEMAND HAS A SOFT LANDING Domestically, two factors impact the demand side of cargo capacity. The first is inflation. Prices rose 8.2% year-over-year in September 2022, the latest in a series of increases that kicked off in summer 2021. Food and fuel costs accelerated particularly rapidly, which led some consumers to cut back on other expenditures. This directly impacts volumes, and in turn, demand for air cargo capacity, notes Wally Devereaux, vice president of cargo and charters for Southwest Airlines. “Not everything that moves on aircraft is affected by economic conditions,” Devereaux says. “But certain items fall into the discretionary spend category. When the economy softens, you’ll see reduced demand and lower volumes for those types of products.” Second, after two years of robust goods spending, consumers are venturing back into the world of experiences.

Following the initial COVID outbreak, Collins Aerospace responded to shifting market dynamics by making it easier to convert passenger planes into freighters. The Charlotte, North Carolina-based aerospace systems provider began offering packages that could, for example, allow airlines to remove seats and add tie downs and additional firefighting equipment. In one week, an airline could reconfigure a passenger airplane into a freighter, says Joe Virtanen, senior manager of cargo systems business development at Collins Aerospace. As travel restrictions ease, and passenger traffic returns, aerospace manufacturers are shifting their focus toward visibility. Cargo planes will utilize Internet of Things technology and automated data collection to monitor the location and status of shipments, and avionics for pilots to observe cargo while in flight. “In the future of cargo aircraft, you’ll be able to track a shipment from the cargo loading system, to where it sits on the plane and what condition it’s in, all the way to the final destination,” Virtanen says. VISIBILITY TAKES TO THE SKIES

November 2022 • Inbound Logistics 45

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