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Air freight industry continues to grow as Hanjin Shipping goes bankrupt

Data for global air freight markets shows a year-on-year rise in October for both demand and capacity, growing at its fastest pace in 18 months.

The figures released by The International Transport Association (IATA) show that, for the third month in succession, both sectors of the air freight industry have improved.

Measured in freight tonne kilometres (FTKs), demand rose by 8.2 per cent year-on-year, its fastest growth since early 2015. Additionally freight capacity, which is measured in available freight tonne kilometres (AFTKs), increased 3.6 per cent over the same period.

 

Air Freight on the rise in South Korea

Several factors have led to the encouraging statistics for the air freight industry; however it is thought that the downfall of Hanjin Shipping has provided the catalyst. In August, the South Korean shipping giant collapsed after filing for bankruptcy. Their business operations quickly seized as other container lines hastily distanced themselves from joint operations.

For almost 40 years Hanjin were one of the world’s leading shipping container companies, transporting approximately 3.7 million Twenty-foot Equivalent Unit (TEU) containers per annum.

With analysts predicting that the collapse of the South Korean firm could have severe effects on global retailers in the build-up to the key business quarter that includes Black Friday, Cyber Monday, Thanksgiving and Christmas, it is thought there may have been a last minute reliance on air freight forwarders.

Speaking after three ships were left anchored offshore at the United States’ busiest port of Los Angeles and Long Beach, the US secretary of commerce Penny Pritzker said: “Retailers’ main concern is that there are millions of dollars’ worth of merchandise that needs to be on store shelves that could be impacted by this.”

While there is no doubt that air freight has benefited from Hanjin’s decline, is also thought that the boost in cross-border e-commerce and the trade of pharmaceuticals has contributed to the growth of the industry.

And according to Boeing in the 2016 World Air Cargo Forecast, world air cargo traffic will grow long term as the economy strengthens, growing at an annual rate of 4.2 per cent for the next 20 years.

It is projected that 930 new and 1,440 converted freighters will be needed to meet market demand; meaning that by 2035 the global air cargo fleet could grow by 70 per cent.

For Tudor International Freight, who use both air and sea for their commercial operations, the boom and bust of the respective industries has led to mix opinions.

Mark Thompson, head of commercial exports said: “Luckily for us, the unexpected crash of Hanjin has not had much of an effect on our operations, due to the alternative options that we have in place.

“What it has led to however, is the rising price of shipping by sea, due to the unsustainably low prices that were in place for years.

“Given the rise in sea freight charges, consumers are now turning to air freight services as they are beginning to be more cost-effective.

“Therefore, it is no surprise to learn that the global air freight fleet will grow at an unprecedented rate over the next 15 to 20 years.

“We have seen first-hand the demand for shipping by air with many flights fully booked and for that we welcome the forecasts from Boeing.”

For any enquiries, please contact Mark by calling +44 (0) 113 238 6744 or emailing mark@tudorfreight.com

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