FedEx forecasts air freight capacity will continue to short in 2022

FedEx forecasts that next year's air freight capacity will continue to be difficult to secure, with tight spaces and multiple supply chain issues in the face of strong demand pressure.

FedEx Express

FedEx Express (Photo: FedEx)

Speaking to Air Cargo News, Karen Reddington, president of FedEx Express Europe, explained that passenger services are recovering and this will put freight capacity under pressure.

Supply chain problems caused by Covid are also likely to continue to affect the air freight market, she said.

“The pandemic has undoubtedly brought supply chain resilience to the fore. With a new, highly contagious Covid-19 variant, reduced port and air cargo capacity and heightened consumer demand, it will continue to impact global trade well into 2022."

“As passenger travel remains depleted, air cargo capacity will be constrained through 2022 all while the demand for goods is likely to grow, with 2021 trading volumes overtaking pre-pandemic levels and achieving their fastest year of growth in over a decade."

“In the long-term, supply chain challenges are likely to trigger a change in the trading landscape, as global trading networks shift and we see continued regionalisation of supply chains.”

Latest figures from Seabury Consulting, a division of Accenture, show that air cargo capacity in the first two weeks of December fell by about 4% year-on-year before the pandemic.

Meanwhile, continued growth in demand - cargo demand in the first 10 months of the year, increased by more than 8% in ton-km sales, according to IATA - put the capacity issue under pressure.

Reddington says that FedEx has introduced new flights over the past few months to mitigate the situation.

“FedEx has the network flexibility and the experience to support businesses navigating these changes,” she said.

“Our new intra-Europe, Europe-APAC and transatlantic flight capacity upgrades are proving vital in keeping goods moving this peak season and will continue to facilitate trade and strengthen global supply chains into 2022.”

Earlier this month, FedEx reported a 9% increase in second-quarter operating profit year-over-year to $1.6 billion, driven by higher margins and increased throughput growth at its FedEx International Priority service, has offset ongoing staffing challenges and air service network inefficiencies related to COVID-19.

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