Air freight becoming more of an option amid supply chain constraints

Author: Adam Yanelli

2021/10/20

HOUSTON (ICIS)--Strained supply chains and the associated higher costs and delays are leading some companies to look for other modes of transporting goods – including via air.

Most chemicals are liquids and are shipped in tankers. But polymers such as polyethylene (PE) and polypropylene (PP) are shipped in pellets and moved in containers, usually on container ships.

Container rates from China and east Asia have spiked amid increased demand for goods as economies reopened from lockdown measures related to the pandemic, leading to congested ports and longer delays.

Huntsman CEO Peter Huntsman told ICIS on the sidelines of the International Petrochemical Conference, (IPC), held by the American Fuel & Petrochemical Manufacturers (AFPM) this week that there have been cases where the company relied on air freight because of delays in the supply chain.

He estimated that the company shipped more product using air freight in 2021 than in the previous 10 years combined.

The US Federal Reserve said on Wednesday in the Beige Book that a business in the Boston District said an apparel contact increased its usage of air freight- historically a very costly way to transport goods - as an offset to skyrocketing shipping costs and delays.

The strained supply chains are leading to more of these examples, and Eytan Buchman, chief marketing officer at online freight shipping marketplace and platform provider Freightos, said he has seen some shift from ocean freight to air, especially on some specific commodities that are more applicable, like agricultural products.

Buchman there are three main reasons for the shift: the price is less than the differential now that container rates have spiked; you can actually move the goods; and improved transit times.

He said the rising costs for containers could offset the typically high costs for air freight.

“Between time and cost, air could become more valuable,” he said.

Airbus, in a joint venture with Singapore’s ST Engineering called Elbe Flugzeugwerke, are converting Airbus A321s that have been retired from carrying passengers to freighters.

The first passenger-to-freighter (P2F) conversion was delivered a year ago to Australian airline Qantas.

The converted A321s offer containerized loading for up to 14 full container positions in the main deck and 10 in the lower deck. It can carry 28 tonnes over 2,300 nautical miles, Airbus said.

Earlier this month, Israel Aerospace Industries (IAI), said it will convert 30 Airbus A330-300 jets from passenger to cargo configurations between 2025 and 2028 as part of an agreement with Avalon, the third-largest aircraft leasing company in the world.

Airbus said when launching its JV that it is receiving keen interest from customers and expects demand to grow as more converted planes enter the market.

Focus article by Adam Yanelli

Additional reporting by Al Greenwood