Challenges & opportunities for air cargo

MIAMI – The 21^st annual Cargo Facts Aircraft Symposium is officially underway, beginning this morning with a workshop presented by the senior staff at Cargo Facts’ sister company Air Cargo Management Group.

In addition to the technical and economic presentations from ACMG, this year’s workshop featured a presentation by IATA’s Global Head of Cargo, Glyn Hughes, titled “Challenges & Opportunities for Air Cargo.” Of course there was a certain amount of technical and economic analysis in Mr. Hughes’ presentation, but in this post I’d like to highlight a couple of challenges he brought up, and stress, as he did, that these are also opportunities.

The first challenge/opportunity comes from the incredible growth of e-commerce, as illustrated by Singles Day in China last year – the equivalent of cyber Monday, in the US, only bigger. Following the announcement of record online sales, a reporter asked Alibaba founder Jack Ma why he did not seem happy. Mr. Ma’s response was to the effect that while the sales volume was excellent, the logistics industry was not capable of delivering the purchased goods in a timely way, and could not support the rapid growth in demand for package delivery driven by the e-commerce boom.

The challenge, obviously is how to improve service levels and increase capacity to keep up with the demand, but consider the opportunity – the Alibaba-led Cianiao network is delivering over 30 million packages per day, and not only is demand still exploding in China, but is about to explode in India. The opportunity is huge.

A second challenge/opportunity is the impact of so-called disruptive technologies on the air freight industry. There are many examples – Uber-style competition, 100-tonne airships, drone delivery… but one that has been pointed to as truly disruptive is 3-D printing. If you can print something at home or in the factory, you don’t need to ship it. But, as Mr. Hughes points out, the things most amenable to 3-D printing are generally the kind of low-value items that do not ship by air. And, in any case, if 3-D printing becomes common, well, 3-D printers and their subassemblies are exactly the kind of high-value goods that do ship by air.