Air transport plays a crucial role when transporting of agricultural commodities from the point of production to the place of further processing and to the final destination. It is important to acknowledge that each form of freight shipping encounters common issues and diverse problems. Sea freight faces multiple issues, especially in connection to seasonal capacity availability or weather-related concerns. On the other hand, road freight may encounter the uncertainty of road construction challenges and traffic jams. Shipping of cargo such as agricultural commodities by air provides the quickest ways of moving products from one place to the other (Dimitrios & Maria, 2018). Despite this positive aspect, shipping products by air encounters various issues.
The Issue of Oil Prices
A major concern faced in the air freight shipment for agricultural commodities that cannot be solved through the use of digital approaches is oil prices. The rationale for this view is that oil prices have been a major worry in the aviation sector. Previous challenges between the United States and Iran made the prices of crude oil to increase significantly (Dimitrios & Maria, 2018). This is detrimental in how people and firms have the ability to access air freight services to transport agricultural commodities.
The other major challenge in the use of air transport for shipping agricultural products is that of protectionism. The reason is that whereas technology used in the contemporary society can assist in keeping up to date with changes in regulations and related tariffs, the issue of trade protectionism in one that affects the entire industry. This means that continued protectionism would result in a significant decline in the overall volume of trade (Bauml & Hausmann, 2019). It also implies that based on the concern of protectionism, there is a high potential that it will be hard for certain individuals and agencies to find it hard to transport agricultural commodities.
The Security Concern
According to Bauml and Hausmann (2019), the security concern is another major issue that affects the use of air freight in the shipping of different agricultural commodities. Whereas there are multiple necessary increases in terms of security guidelines and protocols in the aviation industry, most of them can be dealt with through the use of technology as well as digital tools. However, the major challenges exist when it comes to the transportation of quality farm produce. There are certain risks and vulnerabilities for cyber-attacks that may affect the movement of planes or air traffic control systems.
Air Security - Source: securitymagazine.com
Due to the security concerns, the overall implication in the economic perspective is that different airlines charge high prices to cater for the provision of security. This means that the security concern offers the potential for increase in air freight charges. The increase in freight charges is a major blow for individuals and organizations that rely on air transport to ship their different agricultural commodities (Bauml & Hausmann, 2019).
Revision in Inventory Policies
The revision in inventory policies is a major setback for the transportation of agricultural commodities. The reason is that with supply chain risk as well as the vulnerability for disruptions increasing, firms are questioning the idea behind the maintenance of lean inventories. As a result, retailers and manufacturers are making decisions to carry more safety stock to cover demand and get rid of emergency air freight. This is a seminal transition in supply chain structures across the world. Due to the changes in inventory policies, certain traders tend to hold less inventory. They also tend to order less inventory (Dimitrios & Maria, 2018). This is a challenge because it means that other traders in the supply chain have to lower their amounts of cargo, which has adverse impacts on how they can use the air freight.
the air transportation industry, air cargo is facing a consolidation concern, with large logistics and transportation firms acquiring and merging with small freight forwarders. This means that the availability of air freight companies is reducing. It also implies that individuals with agricultural commodities in need of the air freight services are negatively affected, especially when it comes to their bargaining power.
- Bauml, M., & Hausmann, L. (2019). Air-freight forwarders move forward into a digital future. McKinsey & Company, Munich, Systematic Review.
- Dimitrios, D., & Maria, S. (2018). Assessing air transport socio-economic footprint. International Journal of Transportation Science and Technology, 7(4), 283-290.