2019 vs 2024

Singapore freight forwarders – Star Concord

It’s been over four years since the first outbreak of Covid and the dramatic impact it had on society and aviation, but despite the devastation caused it also induced air cargo’s finest hour as the industry forged together with innovative solutions and a “let’s get it done” attitude to move PPE and then vaccines around the world.

But now that the passenger business has mostly returned to pre- Covid levels, as has air cargo volumes and overall capacity, let’s look at how the industry has moved on.

Whilst looking at the pure data, the numbers would indicate that air cargo volumes have returned to pre-Covid levels, but what are those volumes? Structural shifts in what cargo is transported, how it is transported, where it is transported from, what technology we use in the transportation process and how we tackle sustainability: a word that barely featured in 2019 industry discussions.

e-commerce accelerated exponentially during the Covid period as consumers globally were restricted to shopping from home. This new wave of consumer activity has continued on its growth trajectory and today accounts for about 20 percent of total air cargo volumes. This number is projected to grow to about 30 percent within the next three years.

It is estimated that e-commerce exports from China account for about the equivalent of 70 747s of capacity each day.

In 2023 alone, it is estimated that 2.6 billion online shoppers worldwide made 30 percent more purchases than the previous year. This surge in consumer activity propelled e-commerce sales to reach a staggering US$5.7 trillion, with expectations of surpassing US$8 trillion in the coming years.

Today, Temu and Shein account for roughly 7 percent of total air cargo volumes, according to McKinsey research. But where were they in 2019? Temu was only launched in 2022, and Shein was just a fledgling e-commerce platform pre-Covid. Shein’s valuation rocketed from US$5 billion in 2019 to over US$100 billion in 2022, according to the Financial Times.

In terms of online retail sales, Retail Week Prospect reports that Shein sales in 2022 of US$22 billion were greater than that of numbers two and three, Inditex and Nike combined. With this type of demand comes a need for different operational processes with speed, transparency and integration with first and last delivery mechanisms playing an increasingly important role.

In addition to e-commerce growth, pharmaceutical shipments are growing steadily as more people around the world embrace modern medicine with personalised healthcare based on individual treatment programmes which are expected to increase significantly in the coming years.

Perishables, including fresh meat, fruits, vegetables and flowers, have also shown strong resilience and growth with enhanced focus on eliminating waste and spoilage throughout the supply chain.

Production and manufacturing centres have also seen some shifts since the pre-Covid era. China continues to be the main centre of global manufacturing, but the Covid-induced supply chain obstructions have facilitated policy and strategy changes to diversify production sites.

Investment has been made into India, Mexico, Vietnam and other Southeast Asian regions as well as some instances of near- or friend-shoring. As production centres fragment, the need for air cargo and maritime supply chains increases to smooth out this new complexity.

It’s also worth noting that since the pre-Covid time the global affluent middle-class community has grown by several hundred million people, predominantly in Asia, and they bring additional demand for the consumer goods, which are the mainstay of air cargo movements.

Another factor that 2024 sees that was different in 2019 is the buoyancy of the Latin American economy. With strong growth in the region attracting significant foreign investment, we are seeing improved demand on both north- and south-bound routings. Here too, e-commerce is playing its part.

Going forward the industry has to ensure that air cargo in 2024 and beyond continues to evolve as the global economic conditions evolve. Efficient operations require embracing technology at a greater pace than previously and infrastructure must continue to be invested in to meet the increasingly sophisticated needs of today’s cargo.

Safety and security will always remain top industry priorities with a proliferation of Preloading Advance Cargo Information requirements being implemented by states around the world. These targeting systems require the industry to adopt digital solutions across supply-chain partnerships to ensure border management processes can be complied with seamlessly without holding up efficient cargo flows.

Another difference in the post-Covid era to prior is the focus on environmentally sustainable solutions, with the aviation industry having now adopted a net zero 2050 target.

That addresses what powers aircraft in the air, but there are also significant other environmental situations that are being addressed. The industry has made big strides in moving away from single-use plastics which previously ended up in landfill sites. Bio nature plastic substitutes as well as other alternatives are being embraced by more and more organisations.

Greener ground support vehicles, electrically-powered and even clean hydrogen-powered vehicles are increasingly being seen on ramps around the globe. Freight forwarders and trucking companies are also making investments in green road transport solutions.

Airports are making investments to decrease the impact of noise and many are utilising their real estate and large buildings to house large-scale solar energy capture farms.

Significant strides forward have been made in how the industry uses technology during and after Covid. With the challenges posed of passing paper documents to multiple parties during Covid, we saw many organisations accelerate their digitalisation strategies.

This trend has continued post-Covid and is creating a culture of technical and digital innovation. New distribution tools are enhancing market connectivity. New integration tools are enhancing supply chain digital data sharing and, therefore, benefit transparency, efficiency and disruption management. Many states are adopting data-based risk management programmes which again helps promote digitalisation.

Whilst many things have evolved significantly, one crucial aspect has remained, the need for an adequately skilled, trained, tooled, motivated, inclusive, and diverse workforce remains critical for continuing the air cargo success story.

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Author: Edward Hardy