Transport industry: The mother of all peaks is coming

Airfreight space might not have enough capacity to meet the record high demand which is expected by year-end. According to the president of FedEx’s express division, we will reach the “mother of all peaks.” Here are the two reasons why:

#1 Vaccines

You’re all familiar with the number one problem on the planet this year: Covid-19. And in order to cure it, you need a vaccine. Once this issue is solved, we’ll face the ultimate step: distribution. This will be the hard part.

According to the International Air Transportation Association (IATA), even if we decide to provide a single dose only – which never happens, you always need extras – to each of the 7.8 billion individual inhabiting our lovely planet, we would need roughly 8’000 747 cargo planes, fully filled. That’s great in theory, until you remember the fact that the entire planet only owns 1’000.

 

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As if this was not complicated enough, we need to remember that we’re transporting fragile vaccines, not potatoes. A vast majority of the vaccines in development need specific transport care, as they need to be kept near freezing temperature and not abusively moved around. UPS and Lufthansa are already preparing freezer farms to ensure a quality transport, but experts in the pharma industry still play safe estimating that there will be a solid 20% spoiling rate.

 

#2 Christmas

As with every end of year, we are expecting new releases for Christmas, as the new iPhones, the new PlayStation, etc. These items are also to be transported by air. See where we have a problem?

In order to satisfy this amazingly high demand – the highest ever ! – many commercial airlines have transformed some of their unused airplanes in order to support the lacking space as well as still make some pocket money, because, as you know, people do not travel anymore. Even then, we expect the coming months to be the busiest in history in terms of cargo transport.

 

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In the same logic, other companies are adapting to the change. The dollar store company Dollar Tree said they would hire over 25’000 extra workers to operate its stores and distribution centers. Many of these worker will be order fillers, equipment operators and warehouse associate, in order to satisfy the increasing e-commerce demand. These jobs were not included in the 2019 hiring plan and are a direct result of the change in people's shopping habits. Retail giant Target also said it would double its staff during the holiday season.

 

Conclusion

In the end, we have to add a worldwide demand for vaccines to the ever-increasing demand for new electronic products, which means that we will run into important transportation issues in the coming months. The question will be: what will be prioritized? Profit with new iPhones and PlayStations, or global health with vaccines? We anyways do not have enough room for everything, so it all remains uncertain. One thing is for sure, though: companies like UPS and FedEx have very busy months coming ahead.

 

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Sources:

https://www.wsj.com/articles/covid-19-vaccine-delivery-will-present-tough-challenge-to-cargo-airlines-11601890203?mod=business_lead_pos4&utm_source=morning_brew

https://www.nytimes.com/2020/05/25/business/coronavirus-airlines-cargo-passengers.html?utm_source=morning_brew

https://www.investing.com/news/stock-market-news/dollar-tree-plans-to-hire-over-25000-workers-this-holiday-season-2316288

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