April 25, 2018

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Soaring growth: Air cargo trends

The International Air Transport Association (IATA) is the trade association representing approximately 275 commercial airlines worldwide, accounting for more than 83% of total air traffic. The organisation develops global standards and tools, offers financial services and industry solutions, drives transformation projects, creates partnerships, and runs campaigns, advocacy and outreach activities.

In its agenda ‘Cargo Strategy 2018’, IATA discusses air cargo trends and its impact on the global economy.

Air transport is vital for manufactures trade, particularly trade in components which is a major part of cross border trade today. IATA forecasts a rise in cargo carried to 62.5 million tonnes in 2018 (+4.5% on the 59.9 million tonnes in 2017) representing less than 1% of world trade by volume, but over 35% by value. The value of goods carried by airlines is expected to exceed $6.2tn in 2018, representing 7.4% of world GDP.

Air cargo is essential to many facets of modern life. Moving perishable goods from one side of the world to the other would not be possible without air transport. The pharmaceutical industry relies on air transport for its speed and efficiency in transporting high-value, time, and temperature sensitive cargo, particularly vaccines. $13.4bn is spent worldwide on temperature-controlled biopharma logistics. By 2021, it is estimated that this will rise to $16.6bn.

In today’s world, carriage of live animals by air is considered the most humane and expedient method of transport over long distances. Furthermore, most people have personal electronic devices that were built using a global supply chain linked by air.

Amazon, Alibaba, eBay, and other e-commerce companies rely on the express delivery services made possible by aviation to get those devices, and so much more, to their customers. Transport of letters decreased from 340 to 328 billion letters globally, whereas the number of postal parcels grew from 6.7 to 7.4 billion. The best example is China’s famous “single’s day” where in just one day, online shoppers bought goods worth $17.8bn, representing 657 million packages, and air transport plays an essential role in their delivery. In 2016, online retail sales only represented 7.6% of global sales, which shows a huge potential for growth in the years to come.

The cargo business continues to benefit from a strong cyclical upturn in volumes, with some recovery in yields. Volumes are expected to grow by 4.5% in 2018 (down from the 9.3% growth of 2017). The boost to cargo volumes in 2017 was a result of companies needing to restock inventories quickly to meet unexpectedly strong demand. This led cargo volumes to grow at twice the pace of the expansion in world trade (4.3%).

Cargo yields are expected to improve by 4.0% in 2018 (slower than the 5.0% in 2017). While restocking cycles are usually short-lived, the growth of e-commerce is expected to support continued momentum in the cargo business beyond the rate of expansion of world trade in 2018. Cargo revenues will continue to do well in 2018, reaching $59.2bn (up 8.6% from 2017 revenues of $54.5bn).

Read the complete agenda by IATA on www.iata.org

Richard Gale, air cargo sales director, DHL Express – EEMEA, comments:

“In relative terms, the cargo market is in a good place right now and markets are strong and there is no indication there will be a slowdown. Volumes from Asia remain high; Europe has recovered over recent years as well. For the Middle East, despite competition being high, volumes remain strong.

Technology

Technology is and continues to be an ever-increasing part of our cargo business. The available technology is advancing, and our customers continue to demand higher visibility and traceability on their enroute cargo. Pressure on visibility and cargo check pointing continue, and the overall demands on shipment visibility are significantly higher now than ever before. Mobile technology and the expectation of real time information in the palm of your hand 24/7 will continue to increase.

Piece Identification (piece ID) is the next vital step in increasing shipment visibility and pushing the boundaries of what we, as the operator know about the cargo in our possession, as well as giving the customer absolute visibility on what’s moving where, down to piece level. We are working tirelessly to have piece ID as an absolute standard throughout our network.

Additionally, Electronic Airway bill (eAWB) for example, as well as other paperless technology is currently being embraced.

The cargo community is generally a long way behind an integrator type set up, where lots of manual pieces of paperwork & invoices still accompany cargo movements. We need to move away from cumbersome set ups of this nature, where physical pieces of paper can potentially be the achilles heel of cargo movement. By embracing technology and working with local authorities we can dramatically improve the customer experience and ultimately make gains on end to end transit performance.

Drones & Hyperloop

The introduction of drone technology will undoubtedly revolutionise logistics. That said, it may not have the same impact in the general cargo environment. Cargo by nature has a very different profile to your traditional e-commerce shipment where drone technology brings in benefits. You would need a pretty big drone to deliver an aircraft engine to a user. So, I do not see a significant need for drone deliveries in the cargo environment.

As for Hyperloop, it is indeed an interesting concept. We all have a corporate and social responsibility to reduce our carbon footprint and have less of an environmental impact on the world we live in. At DHL, we are working hard to reduce our carbon footprint and have made commitments to become carbon neutral by 2050. Will Hyperloop be a success? I think in relation to some very specific point-to-point movements it can work, but cargo logistics is a complicated process and having the ability to access 220 countries worldwide with one singular system is a significant challenge.  Air transportation will have a place for a long while yet, aerospace manufacturing has aggressive targets on cleaner and more efficient power-plants, and that will filter down into the cargo environment as part of a natural evolution. 

 

 

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