Another key development in the air-freight industry is its increasing attractiveness vis-à-vis shipping. Pre-Covid, air freight accounted for only about 35% of global trade by value2 – and would be used mainly for perishables or high-value goods – as it was around 13 to 15 times more expensive than ocean freight3. However, the price differential has narrowed significantly (airfreight is only three to five times more expensive now) as the shipping industry faces a container shortage, increasing ocean freight rates. This, together with congestion and huge delays at seaports and the global container shortage, has created what appears to be a long-term shift in volumes from sea to air, which bodes well for air cargo operators. Delivery Service Last-mile delivery associated with online sales was already growing pre-pandemic and has surged tremendously since. According to Statista’s Online Food Delivery Report 2019, revenue from online food delivery was growing at 7.5% in the UK, 7.7% in Germany, 10.6% in France, 10.7% in Spain, and 8.4% in Italy. In 2020, the number for the UK had increased to 11.5%. While the need for F&B outlets to partner on-demand delivery service providers is evident, even retail outlets are joining the bandwagon as consumers demand their purchases within 24 hours. This demand is being met by traditional logistics providers as well as startups relying on gig-economy riders. Air cargo prices more competitive Air cargo prices less competitive 0 5 10 15 20 25 Pre-crisis minimum Pre-crisis average Pre-crisis maximum May 2017 Jul Sep Nov Jan 2018 Mar May Jul Sep Nov Jan 2019 Mar May Jul Sep Nov Jan 2020 Mar May Jul Sep Nov Jan 2021 Mar Ratio of chargeable weight rates per kg for air cargo and container Source: Boeing, IATA CargoIS, Freightos Baltic Index 2. https://www.reedsmith.com/en/perspectives/global-air-freight/2022/01/impact-of-covid19-on-cargo-related-claims 3. https://www.freightwaves.com/news/why-is-air-cargo-suddenly-more-affordable-compared-to-ocean-shipping Sources C R E A T I N G S U S T A I N A B L E V A L U E A N N U A L R E P O R T 2 0 2 1 0 6 1
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