Air Cargo's Coronavirus Problem
May 6, 2020 1:17 AM Subscribe
Air Cargo's Coronavirus Problem. Wendover Productions does an in depth dive into the recent history of the Covid-19 pandemic from the perspective of air cargo, aviation and logistics.
One of the things that strikes me is just how resourceful humanity has become. Necessity is truly the mother of invention.
Sam misses one thing about the economics which is the depreciation of the plane. This is a minimal thing in freighter airlines because they use older planes due to their extremely long turnaround times. Commercial airlines basically are how many revenue dollars you can get out of the 80 million bucks you just burned on a 737. A plane that costs next nothing to run just sitting on the ground is just burning $15K a day in depreciation. When you factor this into the 20 years of amortization it makes even more sense to run empty planes if you can get the increased revenue .
Also, re: 50% increase in freight charges, I remember a comment in passing on the Gamers Nexus weekly news video. Steve was mentioning his air cargo price was four times what it normally is to get some merch shipped in from China. Ocean shipping is stable but it still takes three weeks to get from China to the west coast, six weeks to get to Miami through the Panama canal. So even if the wholesale rates increase 50%, what's being passed on to customers is far more than that.
posted by Your Childhood Pet Rock at 9:26 AM on May 6, 2020 [3 favorites]
Sam misses one thing about the economics which is the depreciation of the plane. This is a minimal thing in freighter airlines because they use older planes due to their extremely long turnaround times. Commercial airlines basically are how many revenue dollars you can get out of the 80 million bucks you just burned on a 737. A plane that costs next nothing to run just sitting on the ground is just burning $15K a day in depreciation. When you factor this into the 20 years of amortization it makes even more sense to run empty planes if you can get the increased revenue .
Also, re: 50% increase in freight charges, I remember a comment in passing on the Gamers Nexus weekly news video. Steve was mentioning his air cargo price was four times what it normally is to get some merch shipped in from China. Ocean shipping is stable but it still takes three weeks to get from China to the west coast, six weeks to get to Miami through the Panama canal. So even if the wholesale rates increase 50%, what's being passed on to customers is far more than that.
posted by Your Childhood Pet Rock at 9:26 AM on May 6, 2020 [3 favorites]
What struck me is who is Wendover Productions, and it is a youtube channel started by a 23 year old guy, born in Washington DC, and who now resides in Edinburgh, Scotland. A guy named Sam Danby. In one sense he is the interesting story. He has millions upon millions of subscribers, and every time he opens a new channel his current subscribers, apparently move over to have a look. He is a 23 year old ad hoc, educational institution.
posted by Oyéah at 10:08 AM on May 6, 2020 [3 favorites]
posted by Oyéah at 10:08 AM on May 6, 2020 [3 favorites]
My employer just had a reasonably good first quarter because we specialize in arranging the logistics of all this logistics -- booking, customs, distribution, etc. It's been all hands on deck to make sure our systems are running in top form because many, if not all, of these freight flights are charters and are worth a great deal of money, and delaying the electronic paperwork can mean a financial hit for everyone involved.
This is fascinating stuff and will get passed around the (virtual) office at work tomorrow.
posted by lhauser at 7:16 PM on May 6, 2020 [3 favorites]
This is fascinating stuff and will get passed around the (virtual) office at work tomorrow.
posted by lhauser at 7:16 PM on May 6, 2020 [3 favorites]
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posted by ellieBOA at 5:10 AM on May 6, 2020