The World Health Organisation (WHO) is complaining about airfreight charges for vaccine-related consignments. Paul Molinaro, who is WHO Chief of Operations Support and Logistics, commented to the news agency Reuters that “across the board” increases in airfreight rates were threatening to make the movement of vaccines to emerging nations more difficult. In particular, he cited rates for the movement of dry ice, saying; “I just had a quote from a cargo company – a big one that shall remain nameless – Dallas, Texas, USA to Sierra Leone, Freetown – at sort of $105 a kilo, which is outrageous actually,” he said. The “normal price” would be $4-$6 per kilo”.
In the present state of the market, this is perhaps not very surprising. Consumer demand in the US is strong and the need to sustain inventory is not helped by the level of congestion in container shipping. Combined with the huge shift towards internet retailing, airfreight is experiencing a moderately robust recovery in demand. Yet the supply-side is a mess. IATA’s most recent monthly figures show that in October the volume of cargo capacity available as defined by ‘available cargo tonne-kilometres’ is down 22.6% as compared to last year. The amount moved – measured in Cargo Tonne Kilometres – is down 6.2%, however, the load factor is actually up, at 57.6%. It is this last number that is driving the market.
It might be expected that capacity would be tight prior to Christmas and that this situation will ease in the early New Year. The impact on the ability of pharmaceutical shippers to access this capacity however is very uncertain. Indeed, as the various vaccines are deployed in nations such as the UK and US, economic demand is likely to recover very quickly. This may include demand for air services leading to near-moribund airlines reviving their fleets. However, there is likely to be a difference in the timing of recovery between different parts of the world and this will affect both demand for and the supply of air services. Broadly it might be suggested that the state of the market will be one of recovery, however, the swings in prices may be as volatile as those seen in March or April. Molinaro may have further cause for concern.
Source: Transport Intelligence, December 10, 2020.
Author: Thomas Cullen
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)