How Covid-19 Impacted Freight and International Supply Chains

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With most planes grounded from COVID-19, general consumption remained the same, resulting in a huge pressure placed on freight planes to transport cargo internationally.

Passenger planes began flying ‘ghost flights’ – transporting no passengers and functioning as cargo flights to adapt during the pandemic. Ever wondered why you can only have 20kgs of luggage per person even though you’re paying thousands of dollars to fly international? Well if you didn’t know, planes made a large chunk of their revenue from transporting cargo along with passengers around the world. 

Pre-pandemic, passenger aircrafts were the backbone of how airlines carried cargo in the bellies of passenger flights both domestically and internationally. The Boeing 747-400 (one of the largest passenger planes) can hold 416 passengers along with 5,330 cubic feet (150 m3) of cargo. That’s about as much cargo as can fit in two semi-truck trailers. Now new passenger aircraft now have larger cargo capacity than its predecessors: the Boeing 777-300ER has 18% more cargo volume than the 747-400. 

From a revenue perspective for big airline companies, record low fuel prices offset the cost disadvantage of flying passenger aircraft without passengers, along with a spike in air cargo prices due to the higher demand.

Brisbane Airport’s chief executive, Gert-Jan de Graaff, stated “Virtually overnight, 90% of established air supply chains collapsed, cutting off these markets and leaving producers with few options and little knowledge of which airlines were still operating limited scheduled or chartered freight only services.”

Qantas has adapted by operating 15 international return flights a week with 787 and A330 aircraft designed for carrying people but are now carrying only freight.

“Although off their respective peaks, freight rates across all major routes remain significantly above historical levels, a trend we believe has staying power as passenger airline belly capacity remains largely out of the market,” Cowen analyst, Helane Becker said in a note to clients.

The longer it takes for international borders to reopen, the more costly it will continue to be to move freight around in passenger planes, pushing up prices for consumer goods.

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