Unemployment levels in most developed countries are very low. The covid crisis has functioned as a double-edged sword. People could spend less on travel, which obviously lead to the belly capacity reduction. But the disposable income is also higher which resulted in more demand, especially on e-commerce. This ‘perfect storm’ of reduced capacity and increased demand has caused shipping and air cargo rates to be at record levels.
Add to that the labour shortages of drivers and warehouse personnel and capacity was even more constraint. Overall energy prices, higher transport costs, and higher wages have increased the inflation levels. Strangely enough interest rates have stayed quite low, but the question is for how long.
In my opinion 2022 will be similar to 2021. There probably will be a lot of volatility and capacity will remain constraint and demand levels will be high. As soon as consumers can spend more money on travel and eating out, inflation levels will decrease. If inflation will increase further, this could potentially lead to a slow down. Anyone with freighter capacity basically will continue to have a license to print money. Demand for qualified personnel will continue to be high, further putting pressure on wages. Long haul business travel will probably continue to be less than pre covid levels, while shorter leisure travel will continue to improve. The question will be if travel remains restricted, how many airlines, who rely on long haul (business) travel, will be able to survive without being bailed out or getting even more debt. This could potentially lead to even further capacity reductions.
Airlines traditionally have the aircraft capacity, but in 2022 the share of freighters operated by e-commerce companies, forwarders and even shipping lines will most likely increase. As some acquisitions have shown, when profits soar of certain companies, there likely will be more consolidation as well. Much needed digitization and automation will continue to be implemented, but we should not forget the importance of skilled manpower. The shortage of labour will even further boost automation, but will also continue to cause inflation and supply chain disruptions.
As Darwin said: “It is not the strongest but the most adaptable that will survive.” Also, in 2022 agility will be key. Most likely airlines will continue to outsource more to GSSA’s, in order to remain flexible with all the changing market conditions and because there still will be pressure from board level to keep (labour) costs down.
The opportunity for the GSSA’s is to completely unburden the airline in a very cost effective and efficient way and to align operational cargo management support and expertise from a partnership perspective. The combination of the willingness to take more commitments on capacity, use real time market intelligence with state-of-the-art digital solutions to increase efficiency in operational areas and booking processes, will contribute to more profitability for airlines.
Sebastiaan Scholte CEO Kales group
Interested to join our next edition?
– contact us email: firstname.lastname@example.org