2022 has witnessed a resurgence of air cargo. While passenger aircrafts made a slow and steady recovery from the global pandemic and its variants, it was the cargo operators that held their own. In this scenario spoke CARGOTALK to industry specialists on how they see the future.
Abigail Mathias
Glynn Hughes, Director General, The International Air Cargo Association (TIACA)
2022 was an excellent year for TIACA, we moved many of our key programs forward and saw quite an increase in membership and we increased our event portfolio to enhance member engagement. We expanded our regulatory outreach and engagement and participated in many high-level ICAO sessions with senior government officials. We advocated for more support for air cargo at government level, including supportive regulations and flexible operational scenarios.
We increased our work to connect with the next generation of work force and participated in many targeted campaigns. And we were pleased to launch the TIACA BlueSky program, which is the industry’s first independent assessment program designed to support organizations journey to sustainable transformation.
From an industry perspective, we were pleased to see increases in innovation and digital connectivity. The investment in P2F conversions and in production freighters will ensure the industry has sufficient capacity available when the current downturn in demand reverses. Another takeaway from 2022 was the challenge that the whole industry is facing when it comes to recruitment and retention of staff.
TIACA needs to collectively enhance the value proposition and increase the awareness of what a vital role this industry plays in the global economy and global society.
Nadia Abdul Aziz, President, National Association of Freight and Logistics (NAFL)
From my personal perspective the UAE seems to have strong demand for air cargo. They managed to overcome the COVID negatives and turned it into an opportunity, which in fact our national carriers helped save many lives by delivering vaccines to more than 80 countries. Our airlines successfully navigated the complex landscape of global logistics and supply chain industry in 2021 by focusing on its niche strengths and values, such as agility and responsiveness, customer focused, innovation, the fleet, and their network capabilities.
Our airlines reinforced their positions as global leaders in the airfreight industry. For example, Emirates Sky Cargo was the first to ensure that its trade lanes remain open by reinstating flights and providing additional capacity on key trade routes across six continents. It has committed unwavering support to many communities in developing countries. Emirates has transported last December more than 600 million COVID vaccines to more than 80 destinations.
It has signed an MoU with United Nations CHildren’s Fund (UNICEF), and many more organizations to deliver many urgent goods not limited to vaccines but include food, medicines, products used for manufacturing among others. Great deal of food logistics and humanitarian logistics is being moved out of the UAE.
By 2021-end, our national airlines had operated to over 140 destinations making it 90 per cent of its pre-COVID network coverage. I see demand for our humanitarian cargo movements, transshipment cargo, cool chain, and perishable goods air cargo.
The geopolitical situation also is increasing more air cargo due to the issues or closure of some ports. I see more cargo flow through the UAE and feel we will reach and exceed our pre-COVID rates hopefully by 2023-2024, despite fuel rates being volatile.
Jason Siy, Vice President, Cargo Business, Philippine Airlines
IATA is seeing slower traffic rate for 2023 based on their semi-annual report. An expected growth to 43.6 per cent year-on-year to US$727 billion is mainly driven by higher passenger yield behavior. Freighter activities slowly being taken again by belly space due to the return of passenger activities, except for Asia. Air Forwarders’ Association members remain optimistic despite the flow of volume remaining to be stalled in China.
U.S. consumers will have a disproportionately high impact on airfreight demand, especially in the third and fourth quarters of 2023, as inventory levels tick up and global demand for electronics wanes. I think the key question for 2023 is when will the current economic challenges, which have impacted consumers subside?
High inflation, high energy costs, and high interest rates have conspired with job insecurity to create defensive patterns in consumer spending. When these influences turn more positive, we can expect to see industry growth resuming. For TIACA, we expect to see further focus on sustainability and people issues.
Dipen Lalsodagar, Deputy Director, Cargo Sales, Global Aviation Services
Although, many trade experts are skeptical of the growth of air cargo in 2023, I feel there would be slow but steady growth of air cargo next year. Seasonality may vary, and certain markets will perform better. Also, digital development will create efficiency for air cargo in future. Sustainable aviation using energy efficient technology will also bring changes in the air cargo transportation.
Neeraj Agrawal, Executive Director, Crescent Enterprises
With extreme weather impacting cargo movement and leading to the potential disruption of supply chains coupled with economic challenges and ongoing geopolitical issues, the logistics industry may get off to a bumpy start this year. The rising cost of fuel is weighing on global GDP growth. “Although, most recently we have witnessed benchmark energy prices converge to more ‘normal’ levels, this is often accompanied by a lag due to broad use of commodity price hedging in the industry”, he added. In addition, market volatility will mean businesses.
must adapt to continued volatility with potential price rises which could lead to more exporters opting for sea freight rather than air freight to cut costs.
To mitigate rising costs and uncertainty, more businesses will be further incentivized to embrace the use of digital technology to enhance operational processes—resulting in faster, accurate, and accessible processing when it comes to cargo documentation.
Better data will enhance industry capability by increasing visibility, especially in terms of tracking cargo through the supply chain. “We will see more investment in the sector, both in terms of improving efficiencies and for environmental sustainability.
The global supply chain accounts for 64 per cent of the world’s oil consumption, which means continued investment in critical infrastructure will help enhance efficiencies across global operations.”
The logistics sector has also transformed over the past few years. Agrawal said, “There has been significant investment in the logistics sector over the past few years.
Increasing environmental regulations will continue to motivate the industry to reduce carbon emissions. Recently, Momentum Logistics has replaced its entire UAE transportation fleet with innovative, fuel-efficient trucks that raise the company’s productivity and efficiency, while also helping to propel the shift to sustainable transport.
The entire fleet of 155 trucks are 100 per cent biofuel capable and with the new units brought on this year there has been a 12.5 per cent reduction of carbon output.” With digital investment expected to reach US$2.08 trillion (Statista), there is no denying that investing and adopting new technologies such as the Internet of Things (IoT), 5G, and AI will help streamline supply chains and improve operations globally.
Ashish Asaf, CEO, S.A Consultants & Forwarders
GMoving towards the decarbonization of air transport sector shall be the priority as we track towards 2030, hence capacity disruptions and cost increases are bound to occur during this period. Hence, there could be an extra demand for space, while older aircrafts and engines go for scrapping or an engine refit to meet the goals related to emission reduction.”
Air freight demand will be offset by the near and medium-term challenges posed by a host of challenges such as inflation, reduced purchasing power, consumption pattens and as well the geopolitical issues in Europe. During this time, probable incremental volumes can arise due to increase in the e-Commerce segment from certain Southeast Asian countries as well from the probable disruptions in the ocean freight due to port congestion or lockdowns.
Ketan Kulkarni, Chief Commercial Officer, Blue Dart
Blue Dart will expand its fleet with two Boeing 737s. They are ideal as they can reach smaller airports to increase connectivity and create value for stakeholders. In 2022, the firm signed the UNFCCC Climate Neutral Now pledge as a step towards its sustainability roadmap, making significant strides towards creating technology that is future-ready, thereby opening the door for stakeholders to accept sustainable logistics that aim to shrink the ecological footprint.
With digitization of logistics industry, there will be developments in the coming years as AI, Cloud, automation, Robotics, Block Chain, Big Data, and IoT will be used in logistics, making the smart, while being time-sensitive. The future of logistics indeed is exciting with introduction of drones delivering packages to their destinations among various overhauls within the industry. Businesswise, the people piece of our industry is one that gives the VUCA world we work in, with investments needed in Talent.
Martin Drew, Senior Vice President, Global Sales & Cargo, Etihad Aviation Group
As 2022 comes to an end, we have seen demand for air cargo soften as compared to 2021. While forecasts have been adjusted downwards, the air cargo sector is still projected to grow and outpace pre-pandemic levels in 2023. We will likely see a reduction in capacity constraints, especially out of the Asia Pacific region. We can expect to see some softening of global yield levels with the return of more belly-hold capacity.
However, an imbalance between strong demand and available supply in key cargo origin markets along with a relatively high share of freighter capacity will continue to demand higher yields. Some of the challenges we have faced in 2022 will remain in 2023. We will need to closely macroeconomic factors, high fuel prices, supply shortages and ongoing border and travel restrictions.
At Etihad Cargo, we have worked together with stakeholders to manage the circumstances dynamically, focusing on providing capacity on key routes and expanding our network and operations. We have focused on reframing these challenges as opportunities to enhance and improve our products and services, utilizing a proactive and customer-centric approach to dynamically and agility manage these challenges.
We have maintained close relationships with our customers to ensure we can provide innovative solutions to their capacity challenges. However, even with these challenges, tremendous opportunities are available to carriers who are agile, work collaboratively with stakeholders across the sector, and can adapt to evolving market conditions. We are continuously exploring new territories and countries and focusing on our existing network to provide market-leading services based on customer demand. For example, we have recently announced the reinstatement of a twice-weekly freighter service from Shanghai to Abu Dhabi via Chennai. The additional freighter service will provide additional capacity into two key global markets.
Etihad Cargo now operates 79 weekly flights to India and 11 flights per week to mainland China, providing a total capacity of around 2,000 tons from both powerhouses. As we come to the end of 2022 and look ahead to 2023, we will continue to evaluate new markets and opportunities to grow our offering to our customers as part of Etihad Cargo’s wider cargo strategy. The air cargo industry will see growth across many key sectors.
Etihad Cargo has identified pharma as a high-growth sector and is investing in infrastructure and new product features to enhance our PharmaLife offering. In the coming year and beyond, the pharmaceutical sector will increasingly feature more personalized medication and treatment, including cell and gene therapy.
With new treatments will come specific packaging and transportation conditions, so the entire supply chain will need to be adaptable and proactive in bringing new solutions to the market. In addition to requiring new packaging, these treatments will bring new urgency and unpredictability, so carriers will need to adapt to seamlessly combine traditional pharma shipping with express shipping.
Etihad Cargo is well-positioned to meet the needs of these new types of therapies and has launched a new pharma cool chain facility at our Abu Dhabi hub. We are also exploring the utilization of Artificial Intelligence (AI) to improve forecasting and automation to enhance our current capacity and capabilities to support the sector’s growth. We are investing in our CEIV Pharma-certified PharmaLife product, introducing enhanced features and solutions to ensure we anticipate and adapt to future trends and requirements.
Wilson Kwong, Chief Executive, Hactl
2022 has been a challenging year for the global industry, and Hactl is no exception. The combination of inflation, economic adjustments after post-COVID in developed economies that are major consumers of airfreighted goods and anti-COVID curbs affecting Chinese manufacturing and logistics, the Russia-Ukraine conflict and continuing have caused a drop in airfreight traffic.
Even e-Commerce, which seemed to be growing, has slowed down. But while this is disappointing, it is inevitable and to be expected. Airfreight growth could not have continued at the growth rates of 2020 and 2021, much of which was COVID-fuelled demand, which was short-term. The long-term trend of air cargo is to grow at the same rate as global Gross Domestic Product (GDP), so 2020-21 should be viewed as a blip and a readjustment was therefore to be expected.
Pervinder Johar, CEO, Blume Global
In 2023, AI and Machine Learning (ML) will continue to show great potential as both remain largely untapped. Many applications, with AI/ML, show progress in systemizing information and bringing organizations to the next level. The future of the logistics industry is automation, which currently exists with delivery vehicles, dark warehouses, and some port terminals. But we must ensure that automation is working in tandem with straight-through processing (STP) and that the systems have the knowledge. For this, we should observe the evolution of visibility post the ongoing recession, as many technologies frequently experience a hype cycle and slowly fades away.
In the future, the enhancements in visibility will make it ubiquitous and part of every supply chain planning and execution system. It will gradually cease to exist as an independent product. This year, more companies adopted technology to streamline their supply chain operations, but we also experiencing the direct and indirect effects of various geo-political issues and the supply chain trade bottlenecks global slowdown. Due to large technology adoption, North America has always been our biggest market.
Our EMEA team is growing with new expansion plans in place, our Asia-Pacific operations continue to grow and maintain a good pipeline of clients in target industries. We hope to finish the year on a strong note. We are working to introduce sophisticated technology to create efficient networks and optimize supply chains for customers at an individual level and, in turn, elevate the entire supply chain industry.
Senthil Murugan C, CIO, Fresa Technologies
In 2023, automation and AI will make big difference in the air freight industry. Handling sensitive cargo will become easier to manage using the robotic tech. Last-mile delivery of air cargo will be done by drones. Data sharing between the handling agents will become automated using the latest technology. While every big objective starts with a small step to achieve great movement in 2050, there will be major milestone in 2023.
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