Flying through uncertainty: Air transportation’s impact on supply chain resilience and inventory efficiency

Abstract

The COVID-19 pandemic revealed critical vulnerabilities in global supply chains, highlighting the need for innovative approaches to enhance resilience and operational efficiency. This study addresses the dual challenge of managing global supply chain risks and disruptions while improving inventory efficiency. Specifically, it investigates how transportation modal flexibility—the strategic use of air versus ocean freight—mitigates these challenges. Leveraging industry-level data from U.S. manufacturing sectors spanning 2003 to 2021, this research demonstrates how firms utilized air transport to counteract disruptions, maintain operational continuity, and sustain inventory performance. Findings reveal that while global supply chain risks and disruptions adversely affect inventory efficiency, unique features of air transport offer critical mitigation strategies. This study not only contributes to the discourse on supply chain risk management by emphasizing transportation modal flexibility but also provides actionable insights for firms aiming to adapt to crises and enhance supply chain resilience.