The air cargo industry is deeply intertwined with global trade dynamics, and following increased volatility over recent years, the industry has been directly impacted. As a result of these issues, it’s estimated that in 2022 alone, the industry experienced a total financial loss of between US$20-50 billion globally.
Shifting market and demand patterns
The global air cargo landscape is undergoing a significant transformation due to shifting consumer preferences, buying behaviours, and the rapid expansion of e-commerce.
This has resulted in fluctuating product volume and vastly increased product diversity. The continued growth of cross-border e-commerce is driving demand for faster, more agile airfreight solutions, particularly for express product deliveries. The emerging trend of ‘nearshoring’ whereby manufacturing moves closer to consumer markets is altering traditional air cargo routes and requires greater flexibility in network planning.
This is made more complex due to the uncertainty around fuel prices which creates unpredictable pricing conditions for air cargo operators. To navigate the impact of dynamically changing demand, it’s pivotal for businesses to prioritise adaptability and data-driven decision making. Leveraging technologies, such as AI, IoT and cargo tracking systems offer the industry vast capabilities from real time shipment monitoring, improved demand forecasting, increased supply chain resilience and improved flexible production capabilities.
Capacity and infrastructure challenges
The air cargo industry is experiencing rapid growth, which in turn is exposing issues related to capacity and infrastructure as businesses strive to meet the surge in demand.
According to IATA, European carriers have reported an 11.2 percent year-on-year increase in air cargo demand. Leading cargo hubs are investing and implementing automation, robotics and AI-driven sorting systems to enhance output and efficiency in response to rising demand. This trend of utilising tech solutions is expected to trickle-down the industry to tackle capacity and infrastructure challenges.
Supply chain resilience and risk management
Trade restrictions, sanctions, and geo-political tensions continue to impact global trading networks and thus air cargo routes. Shipment disruptions in turn increase operational costs, creating inefficiencies in routes and delays and risking consumer loyalty. The digital transformation of the air cargo industry presents both opportunities and risks. While digital platforms and freight management systems offer enhanced efficiency and visibility, they also create vulnerabilities to cyberattacks. Resilience and adaptability are key themes in the evolving air cargo landscape. Stakeholders are recognising the benefits of diversifying their service offerings and integrating multiple modes of transport.
By incorporating rail and ocean freight options into their logistics solutions, air cargo providers can offer more comprehensive and resilient supply chain solutions to their customers.
Sustainability pressures
In order for air cargo to withstand growing sustainability pressures and work towards reducing emissions in line with net zero 2050 targets, the industry must embrace and proactively adapt to new carbon taxation policies, emissions reporting requirements, and increasingly stringent fuel efficiency standards. Whilst pressures are significant, this will likely not have a major impact on the industry for the next five to ten years, unless the government invokes penalties.
Trends such as the increased investment in Sustainable Aviation Fuel (SAF) which can offer up to 80 percent less emissions over its lifecycle whilst also helping meet regulatory requirements will likely be increasingly popular. Whilst investment may incur high introduction costs, businesses will likely see significant long-term benefits. Similarly, modernising the existing air cargo fleet is another option to address sustainability pressures within the industry.
By replacing older aircrafts with newer, more fuelefficient models, airlines can achieve substantial reductions in fuel consumption and emissions, whilst also improving operational efficiency and ensuring compliance with evolving regulatory standards.
Further innovation is anticipated as airlines and airports continue to explore new avenues for minimising their environmental impact. This includes the adoption of electric ground equipment, optimisation of flight paths to reduce fuel consumption, and ongoing research into alternative fuels such as hydrogen and electric propulsion.
These emerging technologies hold the potential to revolutionise the aviation industry and pave the way towards a more sustainable future. As the air cargo sector continues to change, industry participants must adopt agility, digitalisation, and sustainability to remain competitive. Monitoring these trends will be essential for overcoming challenges and capitalising on new opportunities
