DUBAI: Global supply chain constraints will continue to weigh on freight carriers until at least the end of next year and could extend beyond 2022 as logistics companies grapple with labor shortages amid booming demand, the Emirates freight boss said.
A shortage of cargo space and manpower due to the pandemic, compounded by a rapid recovery in demand, has blocked seaports and airports and skyrocketed transportation costs.
“It’s not something that is going to go away overnight,” Nabul Sultan, senior vice president of Emirates SkyCargo division, said at the Dubai Airshow.
“I honestly believe it’s going to take at least a year or two, if not longer… I think it’s going to go beyond 2022,” he said. “There are huge logistical challenges out there.”
Much of the world’s air cargo is typically carried by passenger jets, many of which continue to remain on the ground as demand for travel gradually returns.
At Emirates, the passenger jet fleet accounts for around 70% of its total cargo capacity, according to Sultan.
Emirates, the world’s largest international carrier in terms of seats and distance traveled, has removed seats from 16 Boeing 777-300ERs, temporarily turning them into “mini-cargo ships” to meet growing freight demand.
Emirates announced this week that it will permanently convert at least four of its old 777-300ERs to cargo planes. In addition to “mini-freighters”, it also operates cargo-only flights using passenger jets that still have seats.
Emirates will receive converted cargo ships roughly every five to six months starting in the fourth quarter of 2023, Sultan said, although he hopes the time frame will be reduced to nearly four months. The Dubai public carrier would likely more than double its cargo fleet from 10 to more than 20 planes by 2030, he said, and is currently evaluating the new Airbus A350 and Boeing 777X cargo ships.
Sultan said demand for air freight is expected to remain high over the next few years, in part due to an increase in online shopping, although he fears a new wave of Covid-19 infections in Europe. would only cause further disruption if governments enforced blockages.
Etihad Airways of Abu Dhabi expects air freight rates to start declining in the first quarter as more passenger planes return, said Martin Drew, senior vice president of sales and freight.
But with many airlines downsizing and some collapsing during the pandemic, Drew said rates are unlikely to fall to 2019 levels at least for three to four years.