News
19/4/2021

Covid-19: Will the Air Cargo Industry Survive the Aftermath?

The COVID-19 pandemic has severely shaken the aviation industry. That won’t come as a surprise to anyone. However, it’s not all bad news. As with most crises, there have been a few winners among the many losers. Numerous lessons are also being taught. After a year of learning to live with a novel virus, we decided to look at the current effect on the air cargo industry.

 

The biggest winners and losers of the pandemic

Those hardest hit by the coronavirus are undoubtedly the airlines whose core business is transporting passengers. Air travel plummeted by around 60 percent in 2020, costing the airline industry a staggering $370 billion and putting a question mark over the financial health of many companies associated directly and indirectly with the industry.

Conversely, cargo operators are largely benefitting from the decline in passenger flights, which under normal circumstances carry around 50% of the world’s air cargo in their bellies. Express and e-commerce carriers like DHL, FedEx, UPS and Amazon have seen a marked increase in volume. Likewise, those who specialise in carrying sensitive cargo, such as cool chain transporters, are doing well.

 

The impact of global stocks of ULDs

This shift in who carries what has had a direct impact on ULD fleet managers, some of it good, some of it less good. On the downside, the swift and constant fluctuation in the direction of traditional global trade routes is putting severe pressure on the global imbalance of ULDs. Already an industry concern long before Covid-19 appeared, the over- and understock of ULDs in various parts of the world is turning a ULD fleet manager’s headache into a raging migraine.

Too many ULDs in one place ties up a serious amount of cashflow, whereas too few ULDs in another place puts pressure on delivery times. Normally, ULD managers take advantage of available lower-deck capacity to fly back their empty assets because storage at airports is scarce and expensive.

But the absence of regular passenger traffic is making the efficient organisation of ULDs extremely difficult. In fact, the situation has become so bad that some airlines have resorted to storing their ULDs inside their grounded passenger aircraft simply to reduce storage costs.

 

Emerging opportunities for a more efficient and sustainable air cargo industry

On the upside, the global transport of vaccines and the boom in e-commerce is creating increasing demand for freight planes, for new cargo hubs, and for ULDs that fit perfectly the needs of freight forwarders and container leasing companies. This, in turn, creates opportunities for ULD manufacturers like VRR. It’s a chance for us to help our customers operate more efficiently right now and to help futureproof their business. Because one thing’s for sure: there will be another crisis.

So, what is the key to being an efficient and sustainable developer of air cargo containers? It is (we believe) offering the industry sustainable products. In other words, products that help overcome today’s challenges and make ULD handlers and cargo carriers more resilient should a similar situation ever happen again.

Nobody knows for sure if and when we’ll see a return to normal trade flows once the majority of passenger flights resume. That means we don’t know how ULDs will be distributed around the world. What we do know is that—sooner rather than later—ULD fleets need to be rebalanced. We need to have our ULDs in the right place at the right time if we’re to achieve efficiency in the air cargo industry. We need to transform our ULDs and the way we manage them. Only then can we respond adequately to the next crisis.

 

Improving the management of ULD fleets

Does that mean saying goodbye to the standard aluminium ULD? We don’t think so. We’re certain it will continue to be the air cargo industry’s workhorse for years to come. Having said that, there’s no doubt that more sustainable container solutions need to be introduced as well, either by focusing on operational efficiency or on carbon emissions. The pandemic may have grabbed all our attention over the last few months, but we shouldn’t forget the environment. The aviation industry is being forced by governments and regulators to reduce its carbon footprint, and part of that involves improving the management of ULD fleets.

Technology has a crucial role to play here. Digitalisation has been a hot topic in the industry for what seems like forever, but only now is it really getting any traction. Most ULD handlers now offer systems that can locate and monitor ULDs. Such data opens a completely new world of analytics and demand forecasting to fleet managers. Digital innovations like this will help enormously. However, access to real-time data will not on its own increase operational efficiency. We also need to innovate the containers themselves.

 

Confirming the importance of the cool supply chain

If there’s one type of container that has stolen the limelight in recent months it’s temperature-controlled containers, and rightly so. These devices are intrinsic to the global distribution of Covid-19 vaccines, and they, along with the rest of the cool chain, are essential in our fight against the virus. It’s no surprise to anyone that the demand for cool containers, from passive insulated boxes to active portable refrigerators, has risen considerably in recent months.

Of course, there will come a time when the distribution of the Covid-19 vaccine slows down and maybe stops altogether. But it’s clear to us that temperature-controlled containers will remain a critical component of any ULD fleet. And not only for future vaccine rollouts but also for pharmaceuticals, blood plasma, food and other perishables. The pandemic has taught us that the world needs an efficient cool supply chain, so developing innovative solutions for our “We Keep It Cool” product family will remain a priority for us.

 

Solving the imbalance of global ULD stocks

Saving space is also one of our priorities when it comes to ULD design. Our Air7 container, the world’s first inflatable AKE container and the first ever inflatable solution for Unit Load Devices on the market, is due to be launched this year. When empty and folded, it can be stacked seven high on a lower deck or ten high in storage, offering much needed relief to all overstrained fleet managers.

Before the pandemic there was a great deal of interest in this product’s prototype, not only from airlines but also from ULD handlers and long-term leasing companies. Since then, it’s been revealed just how critical the global imbalance of ULDs is. We honestly believe that the Air7 is one of the answers to making the air cargo industry more sustainable and efficient. Therefore, we will continue developing ULDs that save space and money.

 

We go forward together

Unit Load Devices are and will remain incredibly important assets in the aviation industry, and although ULD handlers and manufacturers have struggled in the last year, we believe their future is bright. As long as we continue collectively to find better, more sustainable ways of producing and managing ULDs, we can survive and thrive.


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