Air freight, trade, COVID and the vaccine – plan plan plan
25 September 2020: For a century, global trade has been enabled by air transport. In 2020, COVID has made it tough for airlines to deliver on their promise to shippers. Nevertheless, they have done so.
Airlines are used to adversity. War, ash clouds, terrorism, financial crises, competing business models – they have taken them all on, innovated and delivered their services to passengers and the cargo community alike.
For regions, nations, companies and individuals to trade their way out the legacy left by 2020, we will need the great minds of the air cargo industry to lead; and we have already seen inspirational stories from the freight world as a response to COVID.
Glyn Hughes is the Global Head of Cargo at the International Air Transport Association (IATA) in Geneva. He reminds us how integral the air cargo industry was to trade – pre-COVID. “In fact, 35% of all cargo, by value, would fly on aircraft, be that on dedicated freighter aircraft or in the bellies of passenger aircraft – roughly half flew on passenger planes and half flew on dedicated freighters,” he says.
“That 35% of global trade represented a value of about US$7tr. As a value it was significant, as a volume it represented about 1%. This demonstrates that air cargo’s role, historically, has been to support the global economy by moving around high value, highly sensitive, time-dependent cargo to enable just-in-time manufacturing processes, for example.”
The airline industry is used to disruption and it is used to finding a way of regaining the equilibrium. Remember when volcanic ash from the 2010 eruptions of Eyjafjallajökull Volcano in Iceland disrupted the movement, for example, of car parts from Germany to the US, or the movement of flowers from Africa? Disruption is not just caused by COVID.
“Air cargo has a pivotal role to play in trade which is why, historically, we’ve advocated for a free and open global economy,” says Hughes, pointing to Brexit. “Any time you introduce trade barriers, or any other measures that artificially restrict the flow of goods, they impact on air cargo volumes, and air cargo volumes impact on the UN Sustainability Goals when they inhibit trade with developing nations.”
COVID, in 2020, brought massive challenges. Factories closed, supply chains were broken, and trade routes were ruptured, but the demand for personal protective equipment, respirators and medication rocketed. The market was distorted, and the air cargo industry had to respond.
At the same time, air passenger numbers were strangled. “Roughly two-thirds of the passenger fleet was grounded across April, May and June. Travel restrictions took hold. Air space was closed. The airlines grounded their passenger aircraft which meant that 50% of cargo capacity was lost at a time cargo demand was at an all-time high,” says Hughes.
The result was the use of passenger aircraft like the A330 or the 777 for freight-only operations. Airlines then went one step further and removed the seats completely. “The global freighter fleet is about 2,000 aircraft,” says Hughes. “The airlines mobilised about another 2,500 passenger-aircraft for cargo-only operations. Airlines were able to respond to this exceptional demand for air cargo and secure ongoing revenue, but, most importantly, they have helped with the global fight against the pandemic.”
Perhaps a casualty of this innovative response to this huge need has been the relegation of planned vaccination programmes in developing nations. They, says Hughes, have been a victim. Many of these programmes have been suspended and there is a very real human and social impact of the otherwise extraordinary COVID response.
And now we have the COVID vaccine situation – when it arrives – to conjure with from the logistics point of view. “That is why the air cargo industry is working closely with the pharmaceutical companies, the Global Alliance for Vaccines and Immunization (GAVI), aid agencies, the World Health Organization, and others, to see how the world can prepare for when a vaccine is approved and ready to be distributed,” says Hughes.
Vaccinating 8bn people is going to need extreme planning. “The questions start with: what will the vaccine look like? Will it be a single dose? A double dose? A triple dose? Vaccines are very sensitive commodities to move because of the live cultures and the liquid form. They must always be moved in a temperature-controlled environment. What will that be? Will it have to be frozen?” he asks.
“What if the vaccine has to be temperature-controlled throughout its supply chain? Where in the world will the factories be? There will probably be no factories in Latin America or Africa. You will always be faced with the logistical challenge of moving the vaccine into high temperature climates and the vaccine will have to be maintained at the same temperature throughout the logistics chain.”
The issues that need to be resolved continue: who will be prioritised, how will you return glass vials and needles, and where will the human resources come from? IATA and its airlines members are at the centre of all this planning. Perhaps it will require the mobilisation of more passenger aircraft for freight purposes, but it will all need to be coordinated on the ground.
Maybe one area in which the airline industry has been particularly tested over the decades is security. It is going to need all that experience to manage the security of the COVID vaccine when it starts making its journey from factories to patients. “Sadly, there will be organised gangs who will attempt criminal interference. Just looking at the UK, 60m vials of vaccine are going to be a pretty valuable commodity,” Hughes points out. There will also be huge scope for causing mayhem for negative purposes.
The world’s freight – precious or otherwise – is in good hands, but we have never seen anything quite like this before. This is both a blessing and a curse. “We’ve never had a situation where the entire world is the target for the solution,” he points out. “And this vaccine is being developed in an accelerated process.”
We have never questioned our world air freight industry’s ability to perform, and it will do so again, but COVID has a sinister legacy for the airlines: it has disrupted their business models, caused them to park fleet based on circumstances for which they could not plan, and redefined the shape of those fleets, perhaps irretrievably. Is Hughes concerned that the air cargo fleet is now distorted?
“The travel industry has been decimated by COVID. Already, nearly 8m flights have been cancelled since February. Passenger and revenue numbers are going to be about 45% down. The industry’s going to lose about US$84bn this year, which is about US$230m every single day,” he says, even though airlines have taken safety on board very seriously. Quarantine has complicated the situation further. IATA expects a four to five-year recovery period. “Aviation is being reset,” he says, “but I am confident that aircraft will be brought back into service in a safe fashion to deliver the vaccine.”
Financially, airlines have had to ask for help. “Airlines have been burning through cash since March,” says Hughes. “An aircraft seat is as perishable commodity as you can get…it’s valueless once the plane pushes back.” This is why the airlines have sought government support.
The world’s airlines have been vocal about the pain they are in and we have seen a certain amount of government response. Airlines have been a highly visual indication of the impact of the pandemic.
Hughes concludes: “Let’s not forget that airlines not only support global trade. They also integrate global communities. The more we can interlink communities, the more we can enhance security. It is all about having a shared understanding of each other.”