News# 52 - Air cargo demand drivers


The rapid rise of e-commerce, disruption in ocean shipping and supply chain diversification are some of the main drivers of air cargo demand in the current market.

Speaking at the IATA World Cargo Symposium, Xeneta chief airfreight officer Niall van de Wouw identified three factors that drive air cargo demand: container shipping performance, consumer demand and the need to de-risk supply chains.

On container shipping, van de Wouw said that shippers constantly assess whether they can “trust” ocean carriers enough to put goods on the water relative to moving by them by air.

“They will only use air if they must, and will use ocean if they can,” he explained. At the moment, ocean freight reliability is under pressure due to the Red Sea crisis, which benefits air cargo.

Another driver of air cargo demand is consumer behaviour. Here there is both good and bad news or air cargo, he said.

On the positive side, e-commerce is rapidly on the rise and fuelling air cargo demand.

He pointed out that 18 months ago no one had heard of fast-growing e-commerce firm Temu and now it is one of the biggest users of air cargo in the world.

However, on the negative side, consumers are becoming more aware of the environmental impact of their purchases, which could act as a drag on air cargo volumes as companies turn to ocean shipping.

Finally, he said that shippers were looking to de-risk their supply chains by using hubs that were not so susceptible to congestion and capacity shortages at peak times of the year.

This issue was becoming more important as e-commerce shippers took up more and more of the capacity out of some of the major hubs.

Tom Owen, director of cargo, Cathay Cargo, agreed that e-commerce demand was rising rapidly and added that the industry needed to invest in providing specialised services and infrastructure to attract other cargo types.

“Clearly e-commerce is a phenomenon,” he said. “At Cathay Cargo, 50-60% of our business is e-commerce which is up from about 30% not so long ago.

“I think the challenge for airlines is to make sure we serve the markets that matter and continue to have long-term relationships with shippers. Making sure we spread the risk of the products we carry around the world.”

He added: “The successful air cargo operations and logistics systems will be the companies and airports and organisations that can be really agile and adapt their networks, continue invest through the good and bad times in infrastructure and stand out from the air cargo crowd in terms of differentiation of solutions.”

Owen added that another development had been the diversification of supply chains as companies adopt China+1 or China+2 strategies to reduce risk.

India was a prime example of this trend, he said.

Van de Wouw agreed that nearshoring was happening, but added that while transportation flows were changing, trade flows remained the same.

He gave the example of Mexico, which recently passed China to become the US’ biggest trade partner in value terms.

However, he said that trade from China to Mexico had also risen quickly, showing that the underlying fundamentals had not actually changed.

Another market that has seen rapid growth over recent years is perishables, according to Hong Kong International Airport executive director commercial Cissy Chan. The airport community had been investing in facilities to meet this demand, she said.

“I think perishables is one of the growing segments in the air cargo market and for that reason, we work with the airport communities to ensure that there is a good end-to-end perishable temperature-controlled transport process.

“In this regard, it is not only the software, but also the infrastructure that is very important and it is why we have 32 dollies on our apron to ensure that the goods are kept at the desired temperature between the aircraft and the cargo terminals.

“This segment will continue to grow, especially as the middle class is continuing to grow and more high-quality food will be in high demand.”



Other articles

Contact Us

Booking ALS expert's advice
= "" +en_GB+ "/sdk.js#xfbml=1&version=v11.0&appId=4278221418901009&autoLogAppEvents=1";