There have been many changes in recent years within the air freight and cargo industry but with demand in the future set to rise even higher, there are huge expectations for companies to be able to continue to compete. It’s certainly good news for the air cargo industry that more countries than ever before are ramping up their needs, and it offers glorious opportunities for increased profits and business expansion.
However, to be able to take full advantage of the opportunities which will present themselves, air cargo businesses will need to be able to endure a bumpy ride at times. The future of air cargo may be positive but that doesn’t mean there won’t be challenges to overcome. Being willing and able to adapt to a changing global climate and to forge strategic partnerships will be vital for many companies in the industry.
Optimizing opportunities from E-Commerce
E-commerce has been big business for some time, as more and more customers look online for their retail solutions. One of the biggest mail-order companies in the world, Amazon, has seen demand rise and with that comes an associated cost with shipping. In the US during 2018, the company spent around $14.3 million on shipping items to customers. Boeing backs up the cost of shipping, citing stats of $1.83 trillion in shipping costs during 2017. By 2021 Boeing predicts this figure will have hiked up to $4 trillion with a global market share of 17.5%.
All retailers are increasingly turning to air cargo because of the potential it offers to transport items to the customer rapidly. Traveling from the company in one country to the customer’s door in another can take no more than 72 hours when air cargo is used, and this speed of response is something that’s a big priority for many. This type of market is expected to continue to expand, with a 20% hike forecast for the next three years.
Nevertheless, despite a big expansion predicted, companies must be ready for when the market eventually plateaus. Those businesses who are relying on the plentiful sales at the moment need to form a more comprehensive strategy for the longer-term future.
Adopting Digitalization
As mentioned above, the industry as a whole has not been quick enough to adopt digitalization but that’s something that will need to change if companies want to remain in business. With more competition flooding the market who are prepared to offer the customer the seamless experience they want, it’s a case of either keeping up or collapsing.
Digitalization allows businesses to offer customers a more transparent process, with speedy shipping and precise handling, cutting manual mistakes to a minimum. As well as being more efficient, it’s also eco-friendly too, something which is a growing priority for many customers.
As one example, booking time for an item can plunge from an hour to under a minute when automation is employed. Legacy processes cannot keep up with these drastic efficiencies, so there’s no choice for companies who want to stay in business: either adopt automation or prepare to be edged out.
Embracing new markets
In the west, e-commerce and air cargo are already strongly established but that’s not the case everywhere. In emerging economies such as India and Asia, there are a number of countries that are really only now starting to get a foothold in the market and increasing their air cargo.
In other countries such as China, although there is already a steady flow of business, the rise has been enormous. For example, a new cargo service to New York from China has been scheduled for three times a week, marking an upswing in capacity.
All of this demonstrates that although there may be political tensions and trading tiffs, when it comes to efficiencies and crossing borders, governments are prepared to work together.
The Future is Coming
The future of air cargo is approaching rapidly and many companies will arrive kicking and screaming if they’re not already using, or preparing to use the latest technology. Innovation is key to remain solvent and profitable, and an appetite for new and exciting ways of doing business is essential.
