Jun 21, 2021 - Economy

More companies turn to the sky for shipping crisis workaround

An airplane with a package strapped on top

Illustration: Annelise Capossela/Axios

Companies are increasingly turning to the sky to try to keep up with America's demand for stuff.

  • They're now relying more on planes to carry inventory — rather than getting clothes, shoes and other goods shipped by sea from abroad.

Why it matters: It's an attempt to get around the supply chain snafus already hitting consumers — who have fewer stocked items to choose from and higher price tags because companies are paying more for goods themselves.

  • Sellers are warning that items could run out more quickly this year during Amazon Prime Day, according to CNBC.

Flashback: Companies have used planes to get cargo from overseas before — but it was as much as 10 times more expensive than ocean freight, according to the National Retail Federation's Jon Gold.

  • But it's more comparable now since sea shipping costs have skyrocketed.

Where it stands: Mentions of “air freight” and “air cargo” during corporate earnings calls and other events hit a record high (79) last month, according to data firm Sentieo.

  • Lululemon told investors it's "strategically using air freight" to offset inventory delays "due to issues at the ports."

Catch up quick: Companies are facing historic inventory holdups, thanks to a shortage of containers used to move goods across the ocean — and a backup at America's ports, where those containers arrive.

  • "What we're experiencing right now makes the temporary Suez Canal blockage look like a fender bender on a country road," says Steve Lamar, head of the American Apparel & Footwear Association.

What to watch: Companies are turning to planes only to find that they too are bogged down by demand.

  • "I don't know if the airlines have the capacity to take up as much slack as is needed," says Gold, who focuses on supply chain issues.
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