Air Cargo is Gaining Momentum in 2023

August 22, 2023

Air freight has evolved dramatically, especially after the pandemic. As we navigate the third quarter of 2023, it's time to examine air cargo's role in global commerce.

Since then, air freight has adapted to various market demands and technological advancements. Air cargo is now essential for global supply chains and offers many benefits for businesses worldwide.

Air cargo refers to the transportation of goods via an air carrier, which may be charter or commercial. This mode of transportation is vital for the fast delivery of goods worldwide.

With that, let’s start with a brief industry analysis.

2023 Air Freight Industry Analysis

Air freight is a vital part of the global economy. It transports everything from fresh produce to high-value electronics. In 2020, the global air cargo market was worth an estimated $287.4 billion. With a market size that large, air cargo attracts and fosters competition.

Global business requires efficient and reliable logistics services. The air freight industry is highly competitive, which promotes competition. It has only a few major players competing in the market. The largest air freight carriers in the world are FedEx, UPS, and DHL

These companies operate a global network of aircraft and ground facilities. That allows them to transport goods quickly and efficiently to almost anywhere.

Today, the global air freight industry is experiencing a resurgence driven by several factors. First, the growth of e-commerce has significantly affected the demand for air freight. According to Global Market Insights, the air freight market will grow by 5 percent by 2032.

Furthermore, the growth of e-commerce stands to explode from $6.31 billion in 2023 to $81.15 billion in 2026. Consumers' expectations for expedited delivery times have amplified, necessitating faster, more efficient modes of transportation. 

Second, the increasing globalization of industries has caused the rapid movement of goods across borders. Businesses now source materials and sell products globally, increasing demand for efficient and reliable logistics services. 

The gradual recovery from the pandemic has also played a major role in reviving the industry. As economies worldwide rebound and global trade resumes, air cargo has become instrumental in transporting essential goods, medical supplies, and vaccines.

The gradual recovery from the pandemic has also played a major role in reviving the industry. It is also a relatively safe mode of transportation, with a very low accident rate. For all that, air cargo is also a relatively expensive mode of transportation.  And it is not always the most environmentally friendly option.

Now we’ll look at the benefits air cargo offers.

The Benefits of Air Cargo

1. Speed: Air cargo is the fastest mode of transport for long-distance freight movement. It significantly reduces transit time compared to sea or land transport. That makes it ideal for time-sensitive shipments.

2. Reliability: Airlines generally operate on strict schedules, which makes air cargo a reliable mode of transportation. Another key advantage is its exceptionally low accident rate. Finally, delays are infrequent and usually brief. That helps ensure goods reach their destination as planned.

3. Flexibility: Air cargo is a very flexible mode of transportation. You can use it to transport a wide variety of goods. Air cargo can reach remote or landlocked areas other modes of transport cannot access. This vast reach facilitates global trade, allowing businesses to expand their markets beyond geographical limitations.

4. Safety: Air transport is also subject to stringent security measures. That makes it a safe option for high-value goods. Plus, the minimal handling of goods during transit reduces the risk of damage.

5. Reduced Inventory Costs: The speed of air cargo allows businesses to exploit lean inventories. With practices like "just-in-time," you can reduce extensive warehousing and associated costs.

The Challenges of Air Freight 

Along with air cargo’s attractive benefits come some challenges as well.

The challenges of using air cargo include:

  • Cost: Air freight is a relatively expensive mode of transportation. With rising labor costs driven by the Teamsters, air transport will remain costly. On the bright side, disruptive technologies can tamp down escalating costs of daily operations.
  • Environmental impact: Air freight has a critical environmental impact, because of the emissions.
  • Security: Air freight is a target for terrorists and other criminals. Besides that, there is a risk of lost goods in transit.
  • Weather: According to the FAA, weather caused 75.8 percent of delays in air transportation.

Although the benefits outnumber the challenges, you must understand their challenges. As air freight’s capabilities and benefits grow, its use will likely expand in the future.

The Future of Air Freight 

Air Freight and E-Commerce

The future of air cargo is likely to be shaped by several factors, including:

  • The growth of e-commerce: The growth of e-commerce is driving demand for air freight, as businesses look to ship goods quickly and efficiently to customers around the world.
  • The rise of new technologies: The air cargo industry will likely face significant changes in the future. The emergence of new technologies like drones and 3D printing are two key examples.
  • The need for sustainability: The air freight industry is under pressure to reduce its environmental impact, which will likely lead to the development of more sustainable technologies and practices.

Emerging technologies are shaping air freight in powerful ways. Specifically, let’s look at artificial intelligence (AI), machine learning (ML), and blockchain.

Air Freight’s Technological Innovations

Integrating technology into air cargo operations is another noteworthy trend shaping the industry.  Through disruptive innovation, the air industry can operate more efficiently, saving time and money.

  • AI, machine learning ML, and blockchain are enhancing the efficiency, reliability, and transparency of air cargo operations and costs.
  • Supply chain managers use AI and ML to optimize routes, predict demand, and automate processes. Using these technologies helps reduces costs and improves service delivery.
  • Blockchain technology can improve supply chain transparency and traceability, fostering trust among stakeholders.

The potential for technology to promote the rise of air freight is great.

When You Should Use Air Freight

  • The type of goods being shipped: Some goods are not suitable for air freight. These include hazardous materials or perishable goods.
  • The destination of the goods: Some destinations are more difficult to reach by other transportation modes.
  • The time of year: Air freight rates can fluctuate depending on the time of year. Currently, rates are declining, and capacity is increasing. That makes air freight a favorable option relative to other transportation modes.
  • The weight and volume of the goods: The weight and volume of the goods will affect the cost of air freight.

Conclusion

To sum up, the air cargo industry is a vital part of the global economy. In particular, growth and innovation are defining air cargo in 2023.

It is a fast, reliable, and secure mode of transportation, and it is likely to continue to grow in the

future. The industry's adaptation to technological advancements is enhancing efficiency and reliability in operations     

Yet, the air cargo industry also faces several challenges, as we've discussed. They include the cost of air cargo, the environmental impact, and some security risks. The air cargo industry must address these challenges to remain competitive.

Be that as it may, air cargo’s benefits are appealing. That makes air cargo an attractive option for businesses worldwide.

The data and the trends indicate air cargo is gaining momentum. In all likelihood, air cargo will play a pivotal role in facilitating global trade. And as its use expands, it will drive economic growth.

Partner with American Global Logistics

You should consider the specific needs of your shipment and the destination of the goods. If you are considering air freight, you must compare its costs and benefits with other modes of transportation.  

At American Global Logistics we balance your needs in customizing a transportation solution.  When you need to move your cargo fast and over long distances, then air cargo’s the way to go.

Air cargo also gives you reliability, global reach, safety, and reduced inventory costs. We factor all that into our decision.

Contact AGL to learn about what we can do as your partner to move your air cargo.

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