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Aerospace shipments face growing supply chain capacity crunch

Aerospace shipments are facing a growing capacity squeeze, and the bottleneck is no longer just in the air. Marcelo Riso, VP and global product manager aerospace at Kuehne+Nagel, said the internationalisation of aircraft maintenance was making transportation increasingly critical. He told The Loadstar: "Even routine shipments are now carrying service expectations above standard airfreight levels, because the cost of transport is relatively small compared with the consequences of a parts shortage or operational disruption." The capacity challenge, however, varies considerably depending on what is being moved. Engines are particularly exposed because they depend on widebody main-deck freighter capacity, which is inherently more limited. Aircraft-on-ground (AOG) shipments and other components are more commonly moved in the lower-deck belly holds of passenger aircraft. Mr Riso reckons belly capacity can be more dependable for time-critical aerospace shipments because passenger demand supports frequent and predictable schedules. Freighter operations, by contrast, are more exposed to changes in demand and network deployment. The problem is that aerospace is no longer competing only with traditional airfreight markets. Mr Riso pointed to the e-commerce boom as an earlier source of pressure on freighter capacity, while demand associated with AI infrastructure was now creating another significant competitor, as well as perishables and pharmaceuticals. Large, specialised equipment also competes directly with engines for limited capacity, while semiconductor shippers can command premium allocations, a situation that could become more complicated as the composition of passenger fleets changes. Mr Riso noted the growth of ultra-long-range narrowbodies, such as the B737MAX and A321XLR, which are beginning to take market share from widebodies. The impact on belly capacity is currently marginal, because the aircraft are largely operating alongside widebodies. But if narrowbodies begin replacing widebody services on more routes, the amount of cargo space available could fall. The vulnerability of aerospace supply chains has also been exposed by geopolitical disruption. Mr Riso said a large proportion of widebody freighter capacity was provided by Middle Eastern carriers, meaning disruption to their operations can have effects far beyond the region. When airspace closures forced carriers to suspend or reduce operations, markets including India and Asia-Pacific experienced disruption to routing and capacity availability. Engines and other critical aerospace components were particularly exposed. But the bigger issue, Mr Riso argues, is that the definition of logistics capacity is changing. He said: "Capacity is no longer just an airline issue; it's an end-to-end infrastructure issue." Indeed, in some markets aircraft capacity may no longer be the principal constraint. Ground handling resources, specialist trucking, customs processes, and airport infrastructure can all restrict the movement of high-value aerospace shipments. Manpower is another vulnerability. Driver shortages across Europe and North America can compound delays at loading and unloading points, while limited visibility remains a problem when tracking systems depend on delayed manual updates. For aerospace operators and MRO providers, the timing of these disruptions is particularly important because shipments can already be late before they even enter the transportation phase. Mr Riso said: "Aerospace supply chains and parts availability are already under significant pressure, so by the time a shipment reaches the transportation phase, it's often already running late." A further transport delay can quickly affect aircraft availability and maintenance schedules. The response, therefore, is less about relying on a single source of capacity and more about building flexibility into the logistics network. He advises aerospace supply chains should limit reliance on any single carrier, route, or station, with alternative processes and routing options planned in advance. "Proximity is not always the best solution; access to reliable airfreight capacity can be more important," he added.

Most in logistics still can't make AI pay - the few that can think smaller

Key takeaway: BCG says just 13% of logistics firms see real returns from AI. But this week's crop of deployments suggests the winners aren't chasing grand visions, they're automating the boring stuff. The gap between what logistics executives say about artificial intelligence and what they can actually show for it has become difficult to ignore. A Boston Consulting Group (BCG) report published earlier this month found that while 97% of logistics leaders call AI a strategic priority, only 13% ...

Asia-US East Coast spot rate climb stalls - but is it just a blip?

Indices appear uncertain how to price spot rates this week, but what seems clear is that the Asia-US East Coast trade's substantive growth trajectory of recent weeks has hit a bump - the question is whether this is a blip or something more transformative. According to Drewry's World Container Index (WCI), spot pricing on its Shanghai-New York routing dropped 2% week on week, hitting $9,333 per 40ft, while the traditionally more resilient Shanghai-LA route went from 9% growth last week to flat this week, at $6,818 per 40ft. Indications are that the east coast dip may have been something of a blip, Drewry noting it expects resilience in demand, and the ability of the carriers to manage capacity will mean "freight rates remain less volatile next week". However, sources questioned the logic, particularly with the push to resume Red Sea transits picking up; one source telling The Loadstar: "When that happens, there will be a surge of capacity on the market and rates will crash." Another source concurred, asking: "Why are carriers doing this? It has been their lifeline since the post-pandemic rates collapse, so if they are all going back to the Red Sea, we can surely expect to witness a massive drop off in rates." Not all indices agree and, offering a counterpoint to the negativity of the WCI, Freightos's FBX suggests that the Asia-US East Coast trade's growth rate may be slowing, but its numbers suggest pricing has yet to go into reverse. The FBX pointed out that growth on the trade was up 3% week on week, for an average of $9,576 per 40ft, and well ahead of the $5,073 the index put the pricing at just three months ago, with Asia-US West Coast up 1%, to $7,491 per 40ft. Linerlytica said: "East coast rates continue to outperform, with capacity remaining in short supply that has been worsened by compounding congestion at Chinese ports and tightening draught restrictions on the Panama Canal. "Transpacific demand continues to edge upwards, with the strength continuing into September, in contrast to the sluggish European demand where reduced capacity, with vessels pushed out of position, failed to lift rates." On Asia-Europe trades, the theme was one of continuity, with spot rates again falling. Shanghai-Rotterdam was 3% down week on week, to $4,287 per 40ft and Shanghai-Genoa down 2%, to $4,866 per 40ft. Vespucci Maritime CEO Lars Jensen said: "The post-peak slow downward slide continued for the seventh consecutive week. Over these weeks North Europe rates are down 13% and Mediterranean rates are down 25%." Drewry described the east-west container freight market as being "racked by uncertainty" amid the geopolitical and operational pressures that are continuing to reshape shipping routes - the issues in the Strait of Hormuz the most pronounced. Things are not being helped by low water levels along the Rhine. "We did have some rain this week, though," one source told The Loadstar. Consequently, Drewry advised shippers: "With carriers adjusting capacity through blanked sailings, shippers should book early and allow additional lead time to minimise rollover and transit-delay risks." Linerlytica added: "The difference in cargo strength is expected to last for at least one more month, with transpacific rates expected to hold at current elevated levels." One source active in the Asian markets told The Loadstar they were expecting much the same.