Investigating the dynamic and contingent effects of the US import air freight market throughout the phases of the COVID‐19 disruption

Abstract

Air freight is a fast and reliable mode of transportation in global supply chains. Because of its speed and reliability, air freight has been argued to help firms respond to supply chain disruptions. Yet, the literature lacks a quantitative analysis that examines the dynamics of air freight demand throughout the phases of a disruption as well the moderating factors that influence air freight demand throughout these phases. Drawing on the microanalytic view of property rights theory applied to the dynamics of air freight demand during the COVID‐19 disruption, the study hypothesizes that importers adjust air freight demand based on considerations of demand and lead time uncertainty and that these dynamics will be contingent on heterogeneous product characteristics. Specifically, the study hypothesizes that air freight demand will increase more for products used as intermediate inputs, and that products, regardless of their value, will have higher air freight demand during the large surge in demand after reopening from the initial COVID‐19 lockdowns. The hypotheses are tested using archival import data and other publicly available sources with panel regression models that include product and quarter fixed effects. The study finds support for these hypotheses.