How Aircraft Shortages Will Impact the Supply Chain This Summer

The aviation industry faces a potential aircraft engine shortage this summer, due to a number of factors.

Airlines are being affected by Pratt & Whitney engine shortages and delays in maintenance, impacting Airbus A320 neo family and A220 operators.?Many airlines are investing in newer planes and more fuel-efficient engines. At the same time, a scarcity of air traffic control staff is likely to complicate aerial route capacity in 2023.

Aircraft engine shortages will likely result in reduced cargo capacity, as passenger planes also carry significant amounts of freight in their belly holds. A reduction in available aircraft can lead to delays in supply chain operations and a surge in freight rates.

As supply and demand dynamics shift, airlines may increase prices to cover operational costs and compensate for reduced capacity. This can significantly impact businesses that rely on air transportation of time-sensitive or high-value goods, squeezing profit margins and necessitating adjustments in their own pricing and distribution strategies.

Just-in-time (JIT) manufacturing and distribution systems in industries that rely on precise coordination and rapid delivery, such as pharmaceuticals, healthcare, automotive and electronics, may face significant disruptions. A shortage of aircraft capacity can disrupt the timely delivery of critical components and raw materials, leading to production delays and supply chain bottlenecks. Companies operating on tight schedules and with minimal inventory buffers may struggle to meet customer demand, potentially creating ripple effects throughout the supply chain.

Aircraft shortages could also force businesses to explore alternative shipping routes and modes. Some might need to rely more heavily on ocean freight or other land-based options, resulting in longer transit times and potential logistical challenges. Such changes call for careful planning and coordination to minimize disruptions and maintain efficient supply chain operations.

In times of air capacity shortages, effective inventory management?becomes crucial. Businesses need to reassess inventory levels, reorder points and safety stock to account for potential transportation delays. Meeting customer demand while avoiding excess inventory can be a delicate task. Close collaboration with suppliers and customers, as well as the implementation of advanced “dynamic” forecasting and demand planning tools utilizing real-time data, is essential.

Enhanced visibility across the supply chain becomes equally imperative. Real-time shipment tracking and monitoring can help businesses identify potential disruptions and take appropriate action.

All players within the supply chain ecosystem — including logistics providers, suppliers and customers — need to build strong collaborative partnerships, in order to navigate a shortage of aircraft capacity. They should be engaging in proactive communication, sharing risk-mitigation strategies and identifying transportation options. By diversifying the supplier base and exploring multiple transportation modes, they can enhance the supply chain’s overall resilience.

To mitigate disruptions caused by a shortage of aircraft capacity, businesses need to put into place strategies for achieving visibility, collaborative partnerships, agile inventory management and proactive risk-mitigation. In the process, they can maintain customer satisfaction and ensure the continuity of their supply chain operations.