Air freight’s speed and reliability plays a crucial role in global supply chains, allowing firms to quickly respond and adapt to disruptions and changing customer demands. Despite the higher cost and larger carbon footprint than sea freight, firms often select air freight to transport high-cost, time-sensitive, or low-volume goods. Air freight also helps reduce inventory costs by allowing more frequent deliveries, and it is a vital tool for mitigating the effects of supply chain disruptions (SCDs), which have been increasingly common. The COVID-19 pandemic, however, profoundly disrupted global supply chains, particularly affecting the air freight industry.
The market was left with few options for adapting to the changes that a global pandemic made to our world. Miraculously, post-pandemic adaptations have helped to bring the market back up to speed when it comes to air freight. Despite an 18-month decline from 2023, positive progress in transporting goods has grown into 2024.
Air freight demand increased significantly for intermediate input products and rose across all product types during the post-lockdown demand surge. Despite the numerous advantages and theoretical support for using air freight during disruptions, empirical studies on how air freight demand evolves through different disruption phases are scarce.
In “Investigating the dynamic and contingent effects of the US import air freight market throughout the phases of the COVID-19 disruption,” recent Walton PhD graduate Travis Kulpa (Grand Valley State University), Rodney Thomas, associate professor of supply chain management at the Walton College, and Jason W. Miller (Michigan State University) focus on the recent pandemic’s disruption of air freight. Their study utilizes property rights theory (PRT), which explores how stakeholder ownership beyond land increases the efficiency of an economy, and hypothesizes that importers adjust air freight travel based on demand and lead time uncertainty, with variations depending on product characteristics.
This research grew from Kulpa’s dissertation, which recently won the Council of Supply Chain Management Professionals’ Doctoral Dissertation Award. Research contributions such as Kulpa’s are a big reason why the Walton College’s Department of Supply Chain graduate program is seen as a leader in the field.
Pandemic Disruptions
Kulpa, Thomas, and Miller use PRT to hypothesize that air freight provides stronger economic property rights (EPRs) than container shipping. As the U.S. import air freight market continues to feel the disruptive effects of the pandemic, understanding the frameworks that govern them are key. Namely, how the allocation and enforcement of property rights in the market impacts the aspects of management's behavior and the efficiency of the economy. One of the pros is reducing the lead time uncertainty. Shorter and lower levels of uncertainty in lead times means importers will more likely have the ability to exercise choices. For example, air freight firms can use an imported commodity as part of a production process or sell it to another firm.
With commercial passenger flights largely suspended, the onset of the pandemic in early 2020 triggered immediate and severe disruptions in transportation, specifically in the air freight industry. As such, the belly cargo capacity plummeted drastically, and this reduction in capacity coincided with a surge in demand for medical supplies, personal protective equipment (PPE), and other essential goods.
The modes of transportation used affect the overall costs of transporting goods. The more consistent the speed of the delivery, the more reliable on-time performances occur without incurring costs.
Adaption to Challenges
As the pandemic affected the way markets operated, the air freight industry began to adapt to the new normal. Companies implemented expectedly short-term strategies to manage the ongoing disruptions, focusing on flexibility and resilience. For example, an increased use of charter flights, providing a temporary solution to capacity constraints, adjusted inventory strategies, and shifts from just-in-time to just-in-case models to buffer against supply chain uncertainties. Additionally, adoption of digital solutions for tracking, booking, and managing air freight shipments, enhances operational efficiency.
As vaccines arrived and economies gradually reopened and then ramped up, the air freight market began to stabilize. However, the industry faced a new set of challenges, including labor shortages, regulatory changes, and fluctuating demand patterns.
The pandemic prompted a reevaluation of supply chain strategies, with a greater emphasis on diversification and regionalization to reduce dependency on single sources. This change in structure increased already high freight rates and kept them elevated due to persistent capacity constraints and increased operational costs. This all led to an e-commerce boom driven by the high demand as people shifted back to previous habits.
Resilience in Supply Chains
As the global economy recovers, the U.S. import air freight market continues to navigate the long-term implications of the pandemic. For example, the industry is now focusing on building resilient and sustainable supply chains for the future.
There has been increased investment in air freight infrastructure, including airport facilities and cargo handling technologies, to enhance capacity and efficiency with a growing emphasis on sustainability. This regulatory evolution has led policymakers to revisit regulatory frameworks to ensure they are attuned to the evolving needs of the air freight industry while also addressing security and environmental concerns.
The pandemic had profound and multifaceted effects on the U.S. import air freight market. This study reveals that from the initial shock and capacity constraints to the adaptation and structural changes, the industry has continued to adapt to meet the demands. Moving forward, stakeholders can continue to innovate and invest in infrastructure, technology, and sustainability to build a more robust and agile air freight ecosystem capable of withstanding future disruptions.
Victoria Hernandez is a second-year graduate student in news narratives at the University
of Arkansas School of Journalism. She holds bachelor’s degrees in English and journalism
with minors in history and gender studies. Her writing experience includes writing
for The Arkansas Traveler, serving as editor-in-chief at Hill Magazine, and interning
at KUAF, The University of Arkansas Press, and The Gayly. She currently serves as
the Director of Strategic Media and Collaboration and as a Gender Studies graduate
assistant.
