Celebrating the New Year and Looking Ahead

The air cargo industry has just completed a banner year after a long, hard climb out of the depths of the Great Recession. ACMG, consulting sister company to Cargo Facts, expects the good news to continue, although 2017’s double-digit growth rates will subside to more sustainable levels in the new year. While the good fortune is welcome cause for celebration, this is no time for complacency in coping with the many challenges and opportunities the industry faces. I share below, some of our thoughts:

• Aircraft capacity must keep up with demand, fueled by the explosive growth of e‑commerce, but carriers must avoid the temptation of “irrational exuberance”, ordering too many new freighters or converting more passenger aircraft than air cargo demand can absorb.

• Infrastructure needs to be maintained and expanded to accommodate demand. In too many parts of the world, airports are expensive for users, yet both airside and groundside capacity are constrained. On the other hand, some local and national authorities regard airport projects as sources of prestige and risk overbuilding.

• Simplification and constantly improving reliability are needed to improve the value proposition and customer experience of air cargo services. Contributing to this effort is a vital joint responsibility of all members of the supply chain. Data drives everything, but the winners should not be data hoarders; they should be the builders and users of platforms that facilitate sharing relevant data securely among shippers, intermediaries, regulators, airlines and consignees. Technologies like blockchain will make this possible.

• E-commerce is changing the balance between general and express freight, and creating the demand for reliable, cheap contract capacity on routes between massive merchandize fulfillment centers. If we think the big shippers and forwarders squeeze carrier yield now, we have not seen anything compared with the power the global e-commerce marketplace platforms will have to dictate price.
• UAVs, growing from today’s drones to tomorrow’s jumbo jets, will change the logistics chain both in predictable and exciting, revolutionary ways; however, surface and marine modes will not stand still. We must not only stay abreast of, but get ahead of technologies to maintain air cargo’s relevance.

Have a happy and productive new year.

Alan Hedge
Senior Director
ACMG

Those interested in hearing more from Alan are invited to join us at this year’s Cargo Facts Asia Symposium, where Alan will present an update on the impact of e-commerce on global air freight supply chains in a presentation titled, “E-commerce is Commerce”. To register, or for more information, visit www.cargofactsasia.com

ACMG is one of the oldest specialty air cargo consultancies in the world. Founded to address the needs of clients facing the new world of deregulated cargo airline competition in the U.S., ACMG has provided independent advice and perspective to the industry for 40 years. The firm is now global in scope, and besides consulting, produces an annual twenty-year freighter aircraft forecast and e-commerce report.