4 October 2022
Air transportation holds a special position in the world of logistics. With its unrivaled speed and long range, many areas of industry and commerce have no alternative – any other mode of transportation would be too slow, although it may be much cheaper.
The specific nature of air transport makes it necessary for companies offering it to have knowledge and experience that is gained over the years. These consist of knowledge of the nuances of freight billing methods, customs and insurance procedures, ADR procedures, pricing of services or the possibility of obtaining favorable rates. On top of that, you need to keep an eye on the geopolitical arena and follow various global or regional events.
Destabilization of flight service
COVID-19 has hit the entire airline industry hard: carriers, airports, companies providing ground handling services, as well as agencies responsible for air traffic control and safety. The mechanism of the growing difficulties was simple – restrictions on the freedom of movement of passengers and the transport of goods caused sharp declines in the revenues of carriers and air traffic companies, and these companies – forced to reduce operating costs – started with reducing employment.
As a result, people in a special category lost their jobs – the manual workers, who are nevertheless required to be highly skilled and operate in harsh weather conditions around the clock. A significant number of these people did not wait for the end of the pandemic and a return to work in aviation. They changed their place of work, tied up with new companies, and it is difficult to convince them to return. It is equally difficult to find and train replacements. The looming prospect of more waves of coronavirus and the associated downturn in aviation effectively discourage potential candidates, who fear they will share the fate of their predecessors.
Restrictions in the sky
A second, equally serious problem is the war in Ukraine and the restrictions resulting from both the military operations and the sanctions imposed on Russia. The closure of the airspace of two major countries to transit traffic has forced a change in routes, resulting in longer flight times and increased fuel consumption.
It is worth remembering that the mere extension of an aircraft’s operating time generates costs, since every minute of flight time brings the machine closer to the next inspection or overhaul. These activities are costly, so they are included in flight time charges.
The aforementioned problems overlap with two more: a jump in the price of aviation fuel and operating fluids that are derivatives of crude oil, and, as for Poland, also the unfavorable exchange rate of the zloty against the euro and the US dollar.
Who can afford it?
In some industries, there is no choice. Manufacturers can either use air transport or… close down the business. This is the case for the automotive and aviation industries, manufacturers of utility and medical and measurement electronics among others. If they adopt a just-in-time production model, components manufactured mainly in the Far East must arrive at the plant at a precise time, traveling many thousands of kilometers. The downtime caused by the pandemic has done so much damage that no one will risk increasing it by prolonging transportation time.
The future of the market
Currently, the entire logistics industry and its interacting economic sectors are hoping for a return to equilibrium. Such periods of transition, whether caused by lockdowns or war perturbations, perfectly stimulate the development of new concepts, organizational models and procedures. Innovative, disruption-resistant solutions are being sought. Scenarios that not long ago were considered too unlikely to worry about are also being taken into consideration.
For companies in the logistics industry, this is a time to observe the market, reconstruct their biddings, and create new tools to help their customers gain a competitive advantage. Everyone is moving in this direction: giants such as Federal Express or TNT, and smaller players, often specializing in narrow, but demanding areas of expertise.
This is also how Smart Cargo Solutions works – we look for solutions that will benefit our customers, reduce their operating expenses and minimize the risk of costs related to the global situation.