With passenger fleets dusted off and back in the air, has the spotlight that air cargo enjoyed during the pandemic been abruptly switched off, and is the industry banished to standing in
the wings, again? Or are some of the developments over the past three years permanent, and what is their knock-on effect?
Henrik Ambak, SVP, Cargo Operations Worldwide at Emirates, sets the scene for an upcoming industry discussion.
With Covid looong gone (or not so long, since we only stopped tracking it with our staff at the beginning of the year), air cargo already again seems to be at a complex crossroads… What air cargo industry changes are for real and what was just the heat of the moment now being corrected by the ever-brutal market forces?
Cargo takes center stage
During the Covid period, we cargo people were the heroes: ecommerce boomed, any freighter parked in a remote dessert was re-activated, shipping companies launched freighter operations, forwarders took on own charter capacity, and governments happily issued STCs for airlines to cabin-load passenger aircraft. The latter a logical move given that half the global air cargo capacity provided by passenger aircraft was largely grounded. Preighters successfully helped to secure that world trade kept moving… and cargo departments had their day in the spotlight. Airline managements enjoyed the cash flow (especially given the temporarily much better yields), and the thereby partial bottom-line relief provided.
Pushed out by Passenger?
But what now? Passenger fleets have again taken to the skies, and apparently successfully so, guessing from new phrases like “revenge travel”. (All the flights I board these days seem full-full). These flights have brought back cargo capacity, though high interest rates and a preference for travel may have left consumers spending less on the kind of products air cargo was moving during Covid. So, cargo markets are not positive and knock-on effects can be expected. Just recently, Western Global Airlines reported a deal with creditors to avoid bankruptcy… a far cry from the Covid days where everything with wings and carrying cargo delivered gold.
Such is the situation. And then there is also the green elephant in the room that nobody really talks about in depth: environmental sustainability. I know there are some very well-intended actions here and there, but no game changer in the foreseeable future… There is not enough SAF available any time soon, electrical
power is too heavy, and hydrogen power is still a generation or so away. Besides, who really wants to pay more? (Consumer credit cards tell a different story to what most people will answer at this point.)
A great many questions
So, it is not easy to strategize given this situation:
- Beyond the current slow-down, will the market grow or stagnate over the next few years?
- Will shipping companies succeed in attracting customers by having the whole spread of services for the shippers and partly also offering the agent service element? Thus, expanding in width and depth of service?
- Will traditional airlines follow suit and expand their service offering beyond airport-airport, and also add first and last mile services? Slightly “protected” by the capacity provided by passenger flights (which still account for around half of today’s global cargo capacity), and deployed more resiliently given the passenger business.
- Will forwarders continue to add own freighter operations (not entirely a new concept as proven by Panalpina who have long been successful in doing this)?
- What happens to ecommerce? Amazon is allegedly cutting back on its European network while Chinese players keep growing their airborne conveyor belts. Will airborne ecommerce be affected by sustainability efforts?
- Are some shippers changing their profile by adding inhouse logistics capabilities and thus rendering the forwarder less necessary?
- Does any of this have a real impact on ground and cargo operations and the role of the Ground Handling Agent?
Stay tuned – or join in the discussion?
What are the real trends and what is just the occasional one-off?
These are just some of the great questions that Henrik will table at the “Global changing face of air logistics” panel standing on the agenda of upcoming Air Cargo Handling & Logistics (ACHL) Conference in Athens from the 20-22SEP23. We support his initiative and hope that many of our readers will attend the event to hear his arguments and participate in a critical discussion. HS
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