Where does the air cargo grow in the future

Just over the weekend, Volga-Dneper, a staple in spezialized air cargo annonunced to reduce their staff and temporarily ground two Antonov AN-124 as one could read in the press. The company apparently stated a reduced demand due to the US-China trade dispute and the respective reduced need for cargo shippments. On the other hand, a major customer with the German army for transports to and from Afganistan seems to have been lost.

However, overall freight cargo has undergone an impressive and unprecedented rally over the last few years. According to this blog, the air cargo is expected to grow by almost 5% from 2018 to 2019 mostly driven by the rise of e-commerce.

Two different ways of air cargo can be distinguished: Dedicated cargo planes, operated by the cargo subsidiaries of airlines or parcel companies, and cargo that is transported with the regular passenger travels. According to the article, over 13% of the revenue of airlines is expected to come from air cargo in 2019.

Overall, some experts predict a doubling of the demand until the early 20ies, driven by fast deliveries required by e-commerce businesses. If that is so, the question which model will dominate, “hop-along” passenger planes or dedicated cargo plains, to transport the majority of the growing volume. With this, the question of the hub-and-spoke model versus direct connections can be asked again, since certain regions (e.g. Shenzen) produce significant amounts of demand and could possibly favor dedicated connections.

At the same time, the projects such as the Cargo Air Vehicle CAV from Boeing allow us to rethink the distribution network from a hub (although the technology is not yet ready and distance remains to be an issue). Critical aspects for any of these innovations are the cargo facilities where reshuffeling, cross-docking and repackaging of goods need to be carried out to guarantee a more or less efficient supply chain.

And finally it is very unlear what the role of air travel will play within the supply chain. With new manufacturing centers opening up in Ethiopia and sub-Sahara Africa, the global interdependend supply chain for fast mooving consumer goods may require even more air cargo shippments between specialized manufacturing centers.

A first step is anyway to conclude the digitalization process of shipping documents, if with or without blockchain is not that relevant, to enable faster movement of goods. Secondly transport should be priced at fair value, including the respective environmental costs. And third, access to the transport network should be as easy as possible to support fair and open markets.

 

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