How does the global air freight future look like?

How does the global air freight future look like?
08 Feb, 2022

Air freight market is usually impacted by boom in e-commerce, supply chain disruptions, and a dip in the frequency of passenger flights. Thus, there are very little chances of it being in a bright spot. Referring to global law firm Reed Smith’s recently released report, let’s see how the aviation industry landscape has been changing after two turbulent years and the challenges and opportunities lying in store for air freight companies in India and abroad.

The report titled ‘Global air freight’s future – The sky is the limit’ highlights the trends that are responsible for changing the shape of the air freight segment, including environmental considerations, new technology, the challenges of passenger-to-freighter conversions, changes in legal governance, new legislation, developments in electric vertical take-off and landing (eVTOL) aircraft.

Let’s take a look at the key takeaways from the report:

  • Drone technology is going to rule the air freight industry as it offers unique long-term logistical, cost-saving, and environmental benefits. Many air cargo companies in India as well as abroad have started deploying this technology.
  • Pricing of freight is expected to remain buoyant due to the limited supply and low conversion rate of freighters. 
  • $8 billion of capital has been invested into the development of eVTOL aircraft over the last five years, with the cargo market expected to reach $58 billion by 2035. 
  • The passenger-to-freighter conversion market is growing, with approximately 750 conversions projected over the next 20 years. 
  • The focus of airlines should be on maintaining high cargo revenue in tandem with passenger flights. 
  • Investment in newer, more fuel-efficient aircraft has been seeing an increasing trend. 
  • Three kinds of cargo-related liability claims are on the rise. 
  • Volatility in fuel price is expected to have more impact on international aviation than carbon offsetting costs; however, offsetting costs will inevitably need to be pushed onto customers, creating new price pressures. 
  • Customs authorities are increasingly looking up to carriers when it comes to enforcement at the border and liability for non-compliance. 

After the pandemic saw a downward trend in the growth of air passengers, the air freight industry has been able to achieve a brighter spot. This indicates that some of the pandemic-driven boon to air freight will continue and environmental trends will also continue working in favor of air freight by driving the need to manufacture more fuel-efficient freighters. For a lot has changed in the air freight industry over the last two years, it doesn’t seem too viable to predict the future. If we succeed in identifying where and how we should be putting all our attention and resources, we would be in a better place to support our clients in the industry.

The key takeaways from the report would prove to be extremely beneficial for the industry participants by providing them with the insights on the current key dynamics that are constantly driving the changes in the air freight industry so that they are able to leverage them for their own benefits.

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