For just $12 a year, get access to both Curiosity Stream and Nebula—home to our brand-new

hour-long documentary called the Final Years of Majuro.

Out of the myriad problems that emerged in the world in Spring 2020, there is one that

is quietly being solved—one that has to do with the behind-the-scenes of a globalized,

modern-day economy.

Understanding it is easy.

At its core, it's a simple supply and demand mismatch.

You see, back in March 2020, when COVID-19 reached pandemic status, almost every airline

in the world drastically scaled back its flying.

It varied from region to region and airline to airline, but the common trend everywhere

was that, if any route got cut, it was almost certainly a long-haul one.

In the era of quarantine periods, border closings, and other travel restrictions, there is near-zero

demand for long-haul, international travel, so intercontinental flights were quickly removed

from airline schedules.

For example, in April 2019, about 500 roundtrip flights per day would fly between Europe and

the US, however, in April 2020, that number was reduced to about 80 per day.

That represents between an 80% and 90% reduction.

Ignoring airline revenue, you'd think that that would be a loss-free situation, though:

it reduces carbon emissions, many governments are covering the salaries of furloughed workers,

it reduces airline expenditure, and nobody's riding in the cabins anyways, but that doesn't

consider what rides below the cabin.

On nearly every intercontinental flight, in the belly hold, among the hundreds of passenger

bags, there is cargo.

In fact, 45% of the world's air cargo is carried in this method.

Now, the math to explain the supply and demand mismatch is simple.

The proportion of cargo carried on passenger aircraft varies from route to route, so 60%

of Western Europe to US air cargo, for example, flies on passenger planes.

80% to 90% of transatlantic passenger flights are not flying, which means that about 50%

of air cargo capacity in this market has disappeared in a matter of weeks.

The situation is less severe in other markets, but, industry-wide, the overall air cargo

capacity reduction was about 23% in March, 2020.

So that's the supply figure, but what about demand?

As a huge proportion of the world entered various lockdown scenarios, economic forecasts

plummeted.

The extent of the financial toll will not be clear for a while, but it is clear that

it is deeply negative.

This all has an effect on air cargo demand.

On a macro level, consumers are buying less, which means less is shipped, which means companies

are buying less, which means less is shipped, which means suppliers are making less, which

means less is shipped.

On a micro level, different jurisdictions worldwide differ on the exact details of their

Coronavirus response, but in many places, factories are shut down which means supply

chains are cut.

So, from an economic perspective, one would predict that demand would almost certainly

be down, but like all things in the age of Coronavirus, there is another dominant perspective—that

of public health.

From almost the moment COVID-19 emerged, it became clear that it was a highly infectious

virus, which means that a crucial component of the safe treatment of an infected individual

is the use of personal protective equipment, or PPE.

In this context, that means, masks, shields, gowns, and more, which healthcare facilities

always stock, but never in the quantity needed to cover nearly universal staff usage for

a long period.

That means that, in order to reduce the risk of staff exposure, nearly every hospital in

the world needed more PPE.

Purely by chance, it turns out that the number one medical PPE producing country in the world

was also the first country to experience COVID-19—China.

Before the pandemic, the country produced 20 million medical masks per day, or about

half of the world's supply.

By the beginning of March, though, this had already been scaled up to more than 100 million

per day.

It was at exactly this time when, simultaneously, China's manufacturing industry started to

inch back to life and the virus truly took hold of the rest of the world.

With how fast COVID-19 ramped up, many hospitals in hotspots like Italy, Spain, and the US

were reusing masks and, even with that technique, were down to only days of supply, so they

needed supply from China, and other manufacturing hubs, as fast as possible.

In the logistics world, “as fast as possible,” means air cargo.

Thanks to this unprecedented and urgent demand for PPE and other medical supplies, demand

for air cargo only dropped by 15% in March, 2020.

Considering air cargo capacity dropped by 23%, that means that there was an 8% gap between

supply and demand.

In the context of this enormous industry, 8% is huge, and so the laws of supply and

demand followed their course.

The cost to transport goods by air spiked, especially in the crucial Asia to US and Europe

markets.

In the last two weeks of March, air cargo rates from Hong Kong to North America jumped

27% above normal, while rates from Shanghai to Europe increased by 50%.

Of course, after a supply and demand mismatch economic forces push companies to increase

supply, which is exactly what happened.

Cargo airlines that could massively ramped up their flights.

Kalitta Air, for example, an American cargo airline, brought some aircraft out of storage

and increased its long-haul flying by nearly 50%.

However, there is only so much that these cargo airlines can do.

They only have so many aircraft, so many pilots, and so many mechanics so they can't massively

ramp up their operations in a short time.

Who did have extra capacity, though, were passenger airlines, and that's where a small

solution emerged.

A plane with no passengers is not necessarily an empty plane.

An average airline earns 15% to 20% of its revenue through cargo, but keep in mind what

an average airline looks like.

Most of the average North American airlines' flying is domestic and short-haul, where little

cargo is carried, so the proportion of revenue coming from cargo on a long-haul flight is

far higher.

Consider too that, on a normal long-haul passenger flight, a considerable portion of the cargo

hold is filled with baggage so that 15 to 20% is derived from only some of the capacity

on only some flights.

Airlines soon realized that there was a possibility of turning a profit flying a passenger plane

with no passengers.

Now, normally, a passenger a330, for example, has capacity for 38 thousand pounds or 17

thousand kilograms of cargo in its belly hold.

That's compared to the freighter version of the a330 which can carry 132 thousand pounds

or 60 thousand kilograms of freight thanks to its completely empty cabin.

That means that the passenger a330 can only carry 29% as much cargo as its freighter counterpart.

However, considering that freight rates have risen by as much as 50%, that means that flying

these aircraft can earn about 44% as much per flight as their freighter counterparts

normally do.

Making less than half as much as cargo airlines clearly would not make flying passenger aircraft

for cargo purposes worth it, but there is more to consider.

First, jet fuel prices are at an all-time low, largely in response to all-time low demand.

The same gallon that would have cost airlines $2.20 in January, 2020 costs about 40 cents

in late-April, 2020, and those prices are continuing to drop.

In normal conditions, fuel is airlines' number one cost so having that drop by a factor

of five reduces the cost to operate a flight dramatically.

That means that they need to earn far less than what a cargo airline does in normal conditions

to break-even.

In addition, most airlines are paying their pilots and other staff anyways.

In the US, for example, airlines are required, as a condition of their government relief

funding, to not lay off or furlough any staff, so the marginal staffing cost to operate an

additional flight is minimal.

Thirdly, with no passengers, airlines have quickly innovated new ways to carry cargo.

Many airlines have loaded their passenger cabins with cargo placed directly on top of

and fastened to seats.

This dramatically increases complexity and loading time, but it also dramatically increases

capacity.

All of these conditions and circumstances combine to the point that, for this brief

moment in time, economics dictate that an airline can turn a profit flying a passenger

plane without passengers.

Big airlines like American Airlines, Air Canada, Lufthansa, and Air New Zealand began cargo-only

flights—so many, in fact, that United airlines, for example, had up to dozens of passenger-less

passenger planes airborne at the same time all around the world.

This also created flights that have never happened before, like a 16-hour nonstop cargo-only

trip from Sydney to Toronto by Air Canada.

But it wasn't all just big airlines on long flights.

Smaller airlines too got in on the game.

Air Greenland started a link on a tiny propeller Dash-8 to transport Coronavirus tests for

processing in a Danish lab, Titan airways flew medical supplies to the remote island

of St Helena on a passenger a318, and Wizz Air flew their passenger a321's to Shanghai

via Kazakstan to transport medical supplies to Hungary.

These circumstances have also led to a dramatic reshuffling of rank and order in the aviation

world.

The list of the world's busiest airports, in terms of annual aircraft movements, is

normally headed by Atlanta, followed by Chicago, Los Angeles, Dallas, Beijing, and a number

of other major hub airports.

Normally, you wouldn't expect an airport from America's third least populous state

anywhere on the first pages of that list, however, for a brief moment in April, 2020,

that was the case.

Anchorage airport, in Alaska, became the world's busiest airport thanks to its strategic location.

It has long been a busy cargo airport as it acts as stopover point for cargo flights from

Asia to North America.

They stop here because it is more efficient for aircraft, on long-haul flights, to take

less fuel and more cargo and refuel halfway through than fly nonstop to their destination.

Also, in some cases, freight is sorted and exchanged between aircraft in Anchorage.

In April 2020, the US ranked number one in the world for new and total Coronavirus cases,

so it had a tremendous need for medical supplies, which are overwhelmingly produced in Asia,

so hundreds of cargo aircraft per day passed through Anchorage on their way between Asia

and the US.

So, while every other major airport in the US fell into relative silence, Anchorage was

busier than ever.

There is, however, one final issue that the air cargo world is facing.

Beyond the short-term issue of too much demand, the long-term issue is that this demand will

not last.

Global air cargo demand closely tracks with global economic health.

Every indicator suggests that the economy will not emerge from the COVID-19 pandemic

even close to as strong as when it entered, so there will undoubtably be some slow months

and years for air cargo.

Once urgent demand for medical supplies eases, and buyers have the time to switch to slower

forms of shipping, the air cargo world will almost certainly follow the fate of its passenger-carrying

colleagues.

On the exact same day as this video goes out, we released a brand-new, hour-long documentary

called, “The Final Years of Majuro.”

It's about the isolated nation of the Marshall Islands and, specifically, what life is like

when you know your nation is coming to an end—when where you live has an expiration

date.

This project is available exclusively on Nebula—the streaming site home to loads of educational

creators' big, ambitious projects.

Now, the best way to get access to Nebula is through Curiosity Stream's bundle deal.

When you sign up for any subscription at CuriosityStream.com/Wendover, including a free trial, you'll get free

access to Nebula, but the best deal is absolutely their annual subscription as, for a limited

time, its available for 40% off meaning both Curiosity Stream and Nebula combined are just

$12 a year.

This new documentary was a huge project where we flew a crew to the other side of the world

and worked with a large team for months in post production, and it was only made possible

thanks to Curiosity Stream, Nebula, and your subscriptions to them.