The usual interpretation from long supplier delivery times is that some businesses may turn to air freight, in order to get the goods they need more rapidly, at a premium. Currently low inventory-to-sales ratio tell a similar story.
In addition to that, air cargo fares–although they are high and have trended upwards in recent weeks–are still relatively affordable compared to container shipping. In September, it was on average three times more expensive to send a kilogram of chargeable weight using air compared to ocean, compared to 12.5times more prior to the crisis leading to inflation and lower manufacturing output.
Normally, the above trends are positive for air cargo, but current supply side issues mean the impact is uncertain. One of the roadblocks is the strong increases in prices, both for businesses and consumers. The G7 producer prices, which measure the input costs paid by producers, rose by 10.8% year-on-year in August, the largest increase since the series started in 1983. Consumer prices inflation for all items was at 4.3% in September, the highest increase since 2008 (Chart 3).