Navigating airfreight’s growth frontier

• Southeast Asia is a dynamic and growing air cargo market with rising demand driven by population growth, urbanisation, e-commerce expansion, and the diversification of electronics production across Vietnam, India, and other countries. 
• Cargo capacity is often concentrated in passenger bellyhold space, requiring creative partnerships and flexible strategies, while bottlenecks shift regionally as industries mature and infrastructure development tries to keep pace
• Infrastructure and digitalisation are both critical, with airports like Changi investing in cargo capacity and Etihad Cargo leveraging digital systems for faster, more agile operations, enabling shippers and forwarders to move goods more efficiently across complex trade corridors

Southeast Asia’s economic resilience, coupled with its strategic geographic position, makes it an increasingly critical node for global supply chains. Population growth, urbanisation, and the expansion of e-commerce are amplifying Southeast Asia’s role in global logistics. From Vietnam’s thriving electronics sector to Singapore’s ambition to become a global cargo hub, the region is undergoing structural transformation.

“The region is an amazing one – very dynamic and full of potential,” Leonard Rodrigues, Director of Revenue Management and Network Planning – Cargo at Etihad Cargo, said. “But you also have to recognise the cycles it goes through. There are extended periods where capacity simply isn’t keeping pace with demand, and then suddenly the equation changes.”

Today, most capacity in Southeast Asia is concentrated in passenger bellyhold space, with freighters deployed selectively. “Apart from Vietnam, where we have our own freighters operating from Hanoi, most of our scheduled capacity in the region comes from passenger aircraft,” Rodrigues explained. “It’s not because the potential isn’t there – it clearly is – but with a limited freighter fleet, you prioritise markets that are more stable and less volatile.”

Part of the complexity stems from the region’s diversity. While Greater China offers scale and consistency, Southeast Asia tends to exhibit sharper spikes and troughs. “This is a region with a lot of feeders, a lot of demand to the US, and significant interline potential through Europe,” Rodrigues noted. “But it requires careful planning and the ability to patch together different capacity types to optimise flows.”

That approach often involves creative partnerships. In Thailand, for example, ad hoc freighter lift supplements widebody passenger flights to Phuket. “We partner with companies like Teleport to secure four weekly freighter services from Ho Chi Minh City into Phuket,” Rodrigues stated. “It’s a good illustration of how strong the market is – strong enough for us to procure additional capacity despite not operating our own freighters there.”

Such flexibility reflects a broader truth: Southeast Asia’s opportunity isn’t linear. “The market is highly dynamic because industries are still maturing, and population growth is driving demand,” Rodrigues explained. “You might have a constraint in Vietnam today, then it shifts to Malaysia or Indonesia tomorrow. It’s a moving puzzle.”

Complementary growth

For years, the narrative has suggested that Southeast Asia’s gain is China’s loss. “That’s simply not the case,” Rodrigues asserted. “China remains incredibly strong, particularly on e-commerce, while Southeast Asia is developing in its own right. The two markets don’t cannibalise each other; they expand the pie.”

The evolution of global electronics production illustrates the point. “Apple once produced everything in China – that’s no longer true,” Rodrigues expressed. “They’ve moved significant volumes to India and Vietnam. Samsung’s majority production is now in Vietnam. But even with this diversification, China’s capacity remains full, driven by e-commerce players like Shein and Temu.”

This diversification has knock-on effects. As manufacturers shift production, new bottlenecks emerge. “Take India – there’s strong narrowbody capacity, but not enough widebody lift to support the scale of exports,” Rodrigues explained. “That’s why Southeast Asia feels so dynamic. Constraints move within the region as industries grow and infrastructure tries to catch up.”

Rodrigues points out an often-overlooked truth: supply creates demand. “Look at how the growth of return capacity from Europe enabled the boom in salmon shipments for sushi,” he noted. “When capacity appears, new business models emerge. Southeast Asia’s story will be similar as more capacity and infrastructure come online.”

Infrastructure investment

Southeast Asia’s airports are racing to expand capacity and integrate cargo into their development strategies. Singapore’s Changi Airport exemplifies this trend, with major investments aimed at reinforcing its position as a global logistics hub. Yet challenges remain.

“You can’t treat the supply chain and passenger operations as separate,” Rodrigues stressed. “Airports have understood that, especially after the pandemic. But even at well-planned hubs like Changi, it’s still complicated to grow as fast as demand.”

For Etihad Cargo, passenger slot limitations have slowed expansion. “We wanted to go double daily on passengers into Singapore, but we couldn’t secure the slots – too strong to the airport, prefer “are still in the process of finding slots that are fit for the airport and for the airline”,” Rodrigues revealed. “Changi supported us by enabling an upgrade to an A380, which helped, but from a cargo perspective, that’s only a partial solution. Long term, once we stabilise passenger growth, we’ll look at freighters – but we’re not there yet.”

Rodrigues sees the issue as global rather than regional. “Everyone faces this challenge,” he said. “Amsterdam, Heathrow – slots are tight everywhere. Even airports committed to cargo face natural constraints. It’s a systemic problem.”

The implication is clear: infrastructure investment is necessary but not sufficient. “Master planning is vital,” Rodrigues argues. “Demand will keep outpacing supply for the next 5 years, “maybe even for the next 15” – modified because forecast beyond 5 years is always seen as a bit more art than science in the industry – there are still some analysis done believing it will extend to 15. Aircraft deliveries can’t match the growth rate, so airports need to prioritise cargo capacity within their expansion strategies.”

The digital dimension

Physical infrastructure isn’t the only battlefield. Digitalisation is emerging as a key differentiator in how quickly cargo moves through Southeast Asia’s increasingly complex trade corridors.

“If you’re advanced digitally, you’re inherently more agile,” Rodrigues said. “When customs requirements change or new security protocols emerge, digital frameworks make adaptation much faster.”

Mandatory pre-loading information requirements in multiple jurisdictions have accelerated adoption. “If you’ve built your systems to handle compliance, you can leverage that for efficiency gains,” Rodrigues explained. “It’s about creating modular solutions that interact, so you can solve problems incrementally as part of a community effort.”

Airports and regulators in the region are responding. “Abu Dhabi Customs, for instance, has a vision to become almost invisible – fully digital clearance processes,” Rodrigues noted. “It’s ambitious, but when successful, it will be a game-changer for speed and reliability.”

For shippers and forwarders, the outcome could be transformative. “Ultimately, it means what you ordered online could arrive a day earlier,” Rodrigues said. “And in a world where speed is everything, that’s a significant competitive edge.”

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