Air Cargo Industry: Overview, Players, Market Characteristics, and Facilities

This report provides an overview of the air cargo industry, including its recent trends and contributions to the aviation sector. It discusses the main players in the industry, their roles and functions, and the market characteristics of the cargo industry. The report also highlights the facilities required for efficient cargo operations. The air cargo industry plays a vital role in the global economy, transporting valuable goods and contributing to trade. It faces challenges and opportunities, particularly in the context of e-commerce and international trade flows. The report concludes with insights into the impact of the COVID-19 pandemic on the industry.

AIR CARGO

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUTION..............................................................................................................................1
REPORT..........................................................................................................................................1
1 Overview of the cargo industry................................................................................................1
2 Main players in the cargo industry role, functions and definition............................................2
3 Market Characteristics of cargo industry..................................................................................4
4 Facilities required for efficient cargo operations......................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUTION
Air cargo refers to carriage or transportation of the goods through air carrier. It is also
known as air freight. Transport services through the air are considered most valuable when the
express shipments are to be made around world and consists of air mail, air express and air
freight. Air cargo flies in same gateway as passenger or commercial airlines. Present report will
provide the overview of the cargo industry recent trends. It will provide about the contribution of
cargo industry to aviation sectors in revenues, employment, cargo movements and costs. Report
will also provide overview on main players of the industry their roles and functions and market
characteristic of the cargo industry.
REPORT
1 Overview of the cargo industry.
Overview
Despite of being costlier transportation mode increasing demand for the chemicals,
perishables and the valuables and rise in demand for just in time manufacturing processes had
created great demand for the air cargo services. Air cargo is impacted by rise in e-commerce
from the both perspectives of B2C & B2B. Evolving e-commerce had put extra pressure over the
sales channels to make faster delivery and optimum supply chains. Scenario is bringing the
opportunities for 3rd party logistics & the warehousing services for integrating with channels of
air e-commerce. Growth in cross border e-commerce is estimated to boost demand for air cargo
sector.
Cargo tonne kilometres industry wide has declined by 3.3% on year to year basis in
January as compared with 1.4% annual decrease in previous months. Seasonally adjusted air
cargo volume has eased due to softer performance of the Middle east and European countries.
The effect of corona virus will be seen in the coming data as it has caused shutdowns, travel
restrictions, disruptions in supply chains and mounting the economic damages to the countries.
Global operating condition to the cargo business has stabilized due to corona virus (Durak and
Yılmaz, 2016). Following two years of the trade tensions China and US have signed phase 1
trade agreement. This will be decreasing trade barriers between the two countries easing the
pressure over international trade flows.
Contribution of cargo industry
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Global economy depends over ability of delivering quality goods at competitive prices to
customers worldwide. It transports around US$ 6 trillion value goods that accounts for 35% of
the world trade in value. Economy of the UK is dependent more over airfreight as compared with
neighbouring countries. Around half of exports are shipped outside EU through air. Economic
contribution of air cargo sector to the economy of UK is 181 billon in year 2017 from imports &
exports and 7.2 billion from airfreight services. it provides jobs to around 1.56 million people
and supports GBP 88.88 billion of the GVA to GDP that accounts for around 4.5% of GDP of
UK.
Reports provide that air cargo is very vital to regional economy of UK. Around 2% of the
production in London is dependent over air cargo services. it is of significant importance to the
pharmaceuticals manufacturing units. Benefits of the increased connections are emphasized.
Export value from Manchester to China has increased by around 300 million in 2 years after
introduction of direct route for Beijing. Capacity of UK freight is more to US as compared with
other EU members and around 60% of trade value was transported through air to US.
Costs
Costs of air freight are relatively higher than the other routes as it is more faster and secured
source of shipping goods. Chargeable weight of the cargo is measured by dividing
length*width*height by 6000. If the resultant outcome is higher than actual weight cargo is
considered volumetric airfreight and rates of air freight will be based over higher figure
(Döppner, Derckx and Schoder, 2018). As the volume of cargo increases rates are reduced.
2 Main players in the cargo industry role, functions and definition.
Air cargo industry is mainly fragmented in the nature. Industry has dominance of some
major players that are operating across different regions of the world. Top Air Cargo FedEx is
having hubs and footprints of the major gateways. Company has acquired number of express
players for increasing service range. Growing demand of the air transportation services is path
for new challenges for the air freight service providers. Companies are required of implementing
new fuel efficient solutions ad adapting innovative technology for providing cost efficient
services.
Air freight shipment cargos begin with shipper. It could be individual or major
manufacturers with items for shipping (Air Freight Industry, 2019). Shippers have option to take
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product directly to the carrier or using third party alternative of logistics provider for finding the
best shipping options.
There are number of major players in the industry which are FedEx known as Federal
Express, United Parcel Services, Emirates Group, Pacific Airways limited and Japan Airlines.
FedEx – It is cargo airline that is based in the Tennessee, United States. It is the largest airline of
world in freight flown. It is delivering cargo and packages over 375 destinations and over all the
6 continents every day.
United Parcel Service – It is American supply chain management and package delivery
company. Along with central package and delivery operations UPS is used for denoting many of
the divisions. Company had net income of 4.791 billion.
Emirates Group – It is international aviation company which is Dubai based headquartered in
Dubai. It carried over 2,389,000 tons in year 2019-20 with decline of around 10.2% from
previous years.
Japan Airlines – It is an international airline company headquartered in Tokyo. It is having JAL
cargo for delivering and mailing services. It has scheduled & unscheduled cargo services over
220 destinations in countries worldwide.
Cathay Pacific Airways – It is a Hong Kong based airline company providing passenger &
cargo services over 190 destinations across 60 countries including joint ventures and code shares.
Company had net income of HK$ 2.345 billion in 2018.
Roles and Functions of the players
Like any other industry cargo industry too has its major players that drive the market. These
major players ensure that healthy competition is maintained between various companies. It could
be seen that from the recent years demand of international goods and services have increased.
Industrialisation has made the manufacturers to produce as early as possible for cost reduction
and reducing the storage cost. These players ensure maintain competition in the market that helps
in having reasonable and adequate prices for the services. These major players have significant
influence over the demand and supply of the air freight services (Yang, Jeong and Yoon,
2020). These players contribute major proportion to the aviation industry and GDP of the
country. They ensure that quality of services is not declining and innovative ideas are being
emerged by the companies.
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3 Market Characteristics of cargo industry.
Air cargo refers to products that are carried in the aircraft for delivery to other places. It
consists mainly of two types of which are air mail and air freight. Global cargo market estimates
provide it will reach valuations of 143.9 billion by 2027. Market of air cargo is estimated to
surge at CASGR of 4.9 percent. Growth of the infrastructure in hubs on global level will be
driving market demand.
In March international CTKs declined by 15.8 percent and similar pace of decline is seen
in the global volumes (15.2%). It is serious weakening of the market as compared with previous
months. Cancellation of the passengers flight across affected international cargo capacity (Gong
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and et.al., 2018). Some of the airlines have converted few passenger aircrafts into cargo flights.
Capacity of global belly cargo has declined by around 43.7%.
European carriers have reported annual drop of 18.8% in global cargo volumes in 2020.
European CTK’s have declined to 32.6% on year to year because of shutdowns of the production
sectors across regions (IATA, 2020). Big markets North America, Asia and Europe have recorded
significant decline in the year.
CTKs have declined in all largest markets except North America that reported slight
recovery of 1%. Asia Pacific Airlines have albeit at slow pace as compared with the February .
Similar patterns are seen in European Airlines.
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4 Facilities required for efficient cargo operations
For having efficient cargo operations airline shipment or air cargo companies are required
to have the facilities.
Airside Facilities
It must have airside facilities like the runway length, apron parking, taxiway, navigational
aids and lightings for accommodating aircraft being flown by cargo carrier.
Storage Facilities
It is very essential for the company to have storage warehouse for storing the delivery
packages. This is required to be managed by company before starting operations.
24/7 Operations
It should have facility of providing custom clearances all day and night of week for
providing efficient services.
Extensive Network
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Different destinations that are served by the air carriers at airport provides shippers and
forwarders more operations to have direct flights for ultimate destination of shipment (Delgado
and et.al., 2020).
CONCLUSION
It could be evaluated from the above report that Air cargo industry is growing at a rapid
speed. Due to the outbreak of virus there has been significant impact over the cargo industry due
to shut downs. Operation of major players of the market is also affected however companies that
were shipping with passenger flights have shown more decline. However the growth of the
sector will continue and make significant contributions to GDP of the economy.
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REFERENCES
Books and Journals
Durak, M.Ş. and Yılmaz, A.K., 2016. AIRLINE SELECTION CRITERIA AT AIR CARGO
TRANSPORTATION INDUSTRY. Transport & Logistics. 16(40).
Döppner, D.A., Derckx, P. and Schoder, D., 2018, January. An intelligent decision support
system for the empty unit load device repositioning problem in air cargo industry.
In Proceedings of the 51st Hawaii International Conference on System Sciences.
Yang, H.J., Jeong, S.J. and Yoon, S.W., 2020. Enhancement for human resource management in
the ULD build-up process of air-cargo terminal: a strategic linkage approach. Journal of
Heuristics. 26(2). pp.301-333.
Gong, Q and et.al., 2018. International trade drivers and freight network analysis-The case of the
Chinese air cargo sector. Journal of Transport Geography. 71. pp.253-262.
Delgado, and et.al., 2020. Recovering from demand disruptions on an air cargo network. Journal
of Air Transport Management. 85. p.101799.
Online
IATA. 2020. [Online]. Available through :
<https://www.iata.org/en/iata-repository/publications/economic-reports/air-cargo-market-
analysis---march-2020/>.
Air Freight Industry. 2019. [Online]. Available through :
<https://www.mordorintelligence.com/industry-reports/global-airfreight-market-industry>.
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