Air Shipping Costs Spike For Goods Coming To Hawaii

Apr 16, 2020

Air travel is down by as much as 96 percent and airlines have responded by drastically cutting the number of flights they operate. That is impacting the price of global shipping.

Commercial flights carry more than just passengers. In addition to luggage, most passenger planes also carry cargo being shipped around the world. Freight helps airlines generate additional revenue from each flight and provides a fast option for moving goods. But in recent weeks, the price of air cargo has skyrocketed, according to Brad Dechter, president of the freight forwarding company Dependable Hawaiian Express.

“If there are no passenger craft or they substantially dry up, that limits your capacity. Until the airlines get back up and until the capacity returns, air freight is going to be more expensive,” Dechter said in an interview.

The rise of e-commerce and increasing prevalence of rapid shipping from companies like Amazon have driven a huge increase in the use of air freight over the past 20 years. In Hawaii, inbound shipments of air cargo increased by 86% in the decade of the 2010s compared to the 1990s, according to the state Department of Business, Economic Development, and Tourism.

Air cargo makes up a relatively small percent of shipping in terms of weight, less than 1% of global totals and around 8% of goods coming to Hawaii. But products shipped by air tend to be more valuable. In 2016, that sub 1% of cargo volume being shipped was worth 35% of total dollar value of global trade.

As much as 50% of global air cargo flies in the belly of a passenger jet, according to the industry publication FreightWaves. The figure is slightly lower for goods flying to Hawaii, where commercial carriers move a little more than 40%.

Air freight is more expensive than an ocean-going cargo ship even under normal conditions. So products shipped via air tend to be expensive or sensitive, like consumer electronics and parts for manufacturing.

Perishable goods are also commonly flown. According to Brad Matheny, managing director of cargo operations for Hawaiian Airlines, perishables like food and agriculture products, fish, and meat make up 80% of Hawaiian’s cargo shipments from the U.S. West Coast. The airline also transports perishable medical supplies like pharmaceuticals and blood.

Higher prices for air freight could mean consumers pay higher prices for those essential products.

Airlines are already in dire financial straits with fewer people flying. Some are seeking to offset those losses by increasing cargo capacity by converting passenger cabins to carry freight.

The Federal Aviation Administration has not approved those kind of modifications for U.S. airlines, but Matheny says Hawaiian is taking other steps to boost freight capacity. Space that was once used for passenger luggage is now filled with cargo. The lower deck crew rest modules, usually needed on long-haul flights, have now been removed to maximize the cargo space.

However, he notes that even those steps are often not enough to make up the revenue lost on a flight with mostly empty seats. Many regular flights have also been reduced in frequency or dropped entirely, cutting the opportunity to move freight.

“Cargo alone doesn’t necessarily make the individual flight profitable, but we’re working hard to make sure that we’re going to places that provide the best opportunities to move cargo,” Matheny said.

He notes that Hawaiian is still operating flights to Los Angeles and San Francisco, two major hubs for cargo shipments that also provide options for Hawaii residents needing to reach the Mainland.

While the spike in rates for air freight may cause the final price for some products to increase, there isn’t much reason to worry about the supply of those goods. The vast majority of cargo still arrives via ship.

Additionally, 60% of air cargo coming to Hawaii arrives on non-passenger flights, dedicated to freight, according to DBEDT. The percentage is even higher for interisland shipments.