Air Freight Industry- Growth, Trends, and Forecast (2020 - 2025)

While land and ship cargo transportation remain as favorable options, goods transport by air is considered as the quickest and the unhindered mode of transportation. According to the airline association, IATA, cargo volumes grew by 4.


New York, July 02, 2020 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "Air Freight Industry- Growth, Trends, and Forecast (2020 - 2025)" - https://www.reportlinker.com/p05821499/?utm_source=GNW
1% to 63.7 million metric ton, in 2018. However, the industry forecast suggests that the number may decrease by 3.7%, to 65.9 million metric ton, in 2019. In terms of freight-ton-kilometer (FTK), air freight recorded growth in March 2019 after three months of year-on-year declines. However, the cargo sector is expected to benefit from lower costs, in 2019. The overall cargo revenues are expected to reach USD 116.1 billion in 2019, up from USD 109.8 billion in 2018.

Furthermore, cargo airlines plan to tie up with logistics service providers to create an efficient supply chain regarding freight forwarding, storage capability, and customs clearances. Air cargo continues to face significant challenges, such as fallen global trade volumes, global economic activity, and weakening consumer confidence, indicating further declines. However, the market is expected to grow due to factors, such as a strong demand for manufacturing exports and increased penetration of advanced technologies in the value chain. In addition, the overall growth rate in the e-commerce sector is expected to reinforce the growth prospects of the market studied, over the forecast period.

Key Market Trends
Emergence of E-commerce Propels Demand for Air Freight Services

Despite being a costlier mode of transportation, the increasing demand for perishables, chemicals, and valuables, as well as the rising demand for just-in-time production of goods, has created a massive demand for air freight services. Presently, air freight is being impacted by the rise of e-commerce from both B2B and B2C perspectives. The evolving e-commerce has put pressure on sales channels for faster delivery and an optimum supply chain. This scenario brings opportunities for the third-party logistics and warehousing services to integrate with the air e-commerce channel. Owing to the continued growth in online shopping, many third-party logistics (3PLs) are offering more multi-modal services, which include air cargo service as a critical mode of transportation. Furthermore, the growth in the overall cross-border e-commerce is anticipated to boost the demand for the air cargo industry.

The major e-commerce players in the industry are disrupting the traditional logistics supply chain with some innovative measures, in order to become independent. Amazon seems to be leading this race by following a different strategy. With Amazon Flex, Seller Flex, or the Amazon Prime Air program, the retail giant is trying to dominate the supply chain for its own services. As a result, it can reduce costs and become independent of its current logistics service providers. As per the technical sources, the company is also offering shipping services to third parties that are not represented on its website.

North America is the Fastest-growing Air Cargo Market and Asia-Pacific Accounted for the Largest Share

As per the current statistical sources, North America registered significant growth rates in 2018. In terms of freight-ton-kilometer (FTK), North America grew by 6.4% in 2018, when compared to 2017, followed by Latin America (5.9%), which is significantly higher than the global average (3.5%). Airlines based in North America were the strongest performers in January 2019. A robust performance from the US economy, which supported job growth and consumer spending, has been an important contributor to the recent cargo market outcomes for carriers in this region. The air freight industry is a key part of the transportation and logistics industry. With the growing e-commerce trends, the demand for air cargo services is increasing significantly and more cargo is moving across the North American borders, as well as to the other regions. The recovering economies of the Latin American countries, like Brazil and Argentina, boost air cargo trade between the two regions. According to industry analysts, the incoming cargo in Argentina soared with 30.9% growth, which was propelled largely due to a large increase in volumes from North America. Furthermore, as per the data collected from Hong Kong International Airport (HKIA), the cargo handled at the airport witnessed an increase of 2.8% in October 2018, and the trade with North America is referred to as one of the two major driving regions of growth, along with Southeast Asia.

However, the Asia-Pacific region accounted for major market share. It is identified as a critical region for the air e-commerce market, which registered a growth rate of 7.8% in 2017 compared to 2016. China holds a major market share in the region followed by Japan. The improving Japanese economy, as well as the rising global demand for electronics and automotive parts, is boosting the growth of the air freight market.

Competitive Landscape
The air freight industry is moderately fragmented in nature. However, the industry is dominated by some of the major players operating in multiple regions across the world. Furthermore, one of the top air cargo carriers, FedEx Corporation, has a footprint and air cargo hubs in major gateways. Additionally, the company acquired regional express players to further increase its service range. On the other hand, the growing demand for air freight transportation services has opened new challenges for air cargo service providers. Airlines need to focus on implementing fuel-efficient solutions and accommodate innovative technologies to provide cost-effective services. For the logistics players to succeed, the storage facilities need to be developed to assist the global increase in air cargo. Special economic zones (SEZ), free trade zones (FTZ), and the bonded warehouses are projected to cater to significant warehousing needs for the freight moving in and out of the airport shortly.

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