Consultant Insight: Freighter leasing option for shippers, supply chain partners

It’s a good time to be in the contracted air transportation market. While some trade lanes have recovered to pre-pandemic capacity, other lanes remain constrained and demand high. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] Total available cargo tonne kilometers (ACTKs) in 2021 were 10.9% lower than in 2019, according to the International Air Transport Association (IATA). By December 2021, ACTKs were only 4.7% below the same month in 2019. Capacity is slowly returning to the market but supply chains are in the midst of an unprecedented transformation that shippers, carriers, logistics providers and software companies are trying to quickly address. At the same time, logistics providers are struggling to meet the insatiable demands of the consumer and the needs of a manufacturing market that is struggling with obtaining on-time the parts and other materials. Overall, air cargo costs remain more expensive for business as compared with container shipping, but shippers are still turning to air due to issues in container shipping, including struggles with port back-ups, repositioning empty containers to the right locations fast enough and rising spot rates. Due to numerous issues last year, container shipping schedule reliability plummeted, which resulted in lumpy inventory levels for many shippers. To ensure adequate inventories for store shelves and at manufacturing facilities, freight forwarders, other logistics providers and large shippers are leasing freighters. “ We are leveraging our world-class fleet and global operating capabilities to increase aircraft utilization and capitalize on strong demand for our services and dedicated freighters, as well as on higher airfreight yields,” said Atlas Air Worldwide President and CEO John Dietrich said in a release. Atlas Air volumes in 2021 grew to 364,061 block hours compared with 344,821 in 2020, with revenue increasing to $4 billion in 2021 from $3.2 billion in 2020. Meanwhile, Air Transport Service Group (ATSG) reported 2021 revenues of $1.73 billion, up 10% from 2020. Adjusted EBITDA was $541.1 million, up 9% from 2020. ATSG also plans to bring more onboard more freighters this year to take advantage of the strong demand. “ We have customer commitments to lease all nine of the Boeing 767s we will deploy in 2022 and the majority of those we expect to lease in 2023. In addition, we already hold lease deposits for more than half of the A330 aircraft we intend to begin deploying in 2024,” Rich Corrado, president and CEO of ATSG, said in a release. Indeed, both companies’ expectations for another strong year are high due to what many industry experts believe will be another year of ocean freight issues and continued strong demand from consumers and manufacturers despite growing economic concerns. At the same time, the rise in domestic and international cross-border e-commerce is driving a need for faster, on-time deliveries. Market research firm eMarketer expects worldwide retail e-commerce sales to represent 20.3% of total retail sales this year, up from 19.0% in 2021 and 17.9% in 2019. Atlas Air has recently partnered with such forwarders and operators as Kuehne+Nagel, Flexport, DB Schenker and DHL Express, along with Alibaba’s logistics subsidiary Cainiao to provide leased planes to address shippers’ demand for quicker inventories, including e-commerce needs. Atlas Air and ATSG will continue to benefit from a topsy-turvy environment as shippers focus more on receiving inventory on time despite the costs. The Air Cargo Tech Summit, the new airfreight logistics event presented by Air Cargo World , will take place live in Miami from June 6-7. Learn more and register here.

Consultant Insight: Freighter leasing option for shippers, supply chain partners

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