Sizing up 2024: Trends to watch, new tech and e-commerce growth

While the latter half of 2023 showed some recovery for the air cargo industry, airlines were still hit with increased jet fuel prices, increased capacity, low demand, geopolitical tensions and natural disasters, all of which contributed to global air cargo revenue losses. The end of the year showed some signs of the industry rallying, with IATA reporting an 8.3% increase in demand for November — a sign air cargo could be on an upswing. Industry experts are not ready to call this the start of a full recovery, but many are cautiously optimistic 2024 could be more profitable than 2023. IATA predicts an 11% increase in global trade and a 3.5% increase in cargo revenue compared with 2019, or pre-pandemic levels, according to the organization's 2024 market outlook report. With the rise in e-commerce from Asia, technology innovations and sustainability initiatives, 2024 could be the reset the industry needs. Market trends Airfreight rates remain higher than before the pandemic despite yearend predictions that rates would decrease, Flexport l eaders said during an airfreight market update webinar on Jan. 16. This may cause airlines to prioritize profitable shipments over lower-cost shipments, the digital freight forwarder said. “We thought that the rates would decrease due to usual seasonality as we used to know it, but the rates are staying on the same higher level,” Milena Milenkovic , regional airfreight manager at Flexport, said during the webinar. “And this will most likely continue for the rest of the first half of 2024.” [caption id="attachment_57139560" align="alignright" width="413"] (Courtesy/Canva)[/caption] Xeneta Chief Airfreight Officer Niall van de Wouw also said it is too soon to announce a market recovery. “To say 2024 is a new dawn is perhaps a little too optimistic, but I certainly think it’s the start of a new cycle for airlines and forwarders, and shippers are likely to also appreciate the stability returning to the market so they can more accurately predict the transportation costs for the products they are selling,” van de Wouw said in an early January release. New trends could emerge based on evolving consumer behaviors, industry developments and global events, Tim Robertson, chief executive at DHL Global Forwarding Americas , told Air Cargo Next . “On the other hand, what we now see is a shifting of global trade — something one might describe as omnishoring,” Robertson said. “This describes a diversification of supply chains using local or near-shore locations for some production or production steps, while still relying on global sourcing for others. “And we, of course, expect to see continued disruption from geopolitical events, weather, natural disasters and other developments that have become the norm within today’s supply chain,” he said. “This has made agility, flexibility and visibility a priority for shippers and their logistics partners.” E-commerce growth With increasing exports from China, Korea and Japan, the market could see a 7% to 9% year-over-year increase in e-commerce for the United States and China, Derek Lossing , founder and senior adviser at Cirrus Global Advisors , told Air Cargo Next . “And you’ll continue to see e-commerce volumes even helping build freighters out of Korea and Japan,” he said. “It’s still the growth driver of the business. … We’re predicting high, single-digit— so China and U.S.— e-commerce growth year on year.” [caption id="attachment_57139542" align="alignleft" width="396"] (Courtesy/Canva)[/caption] The rise of Singapore-based e-commerce retailer Shein continues to boost e-commerce volumes from China, as well, Oscar Marc Schlossberg , executive vice president at Unique Logistics International , told Air Cargo Next. “The impact they’ve had on the global airfreight landscape, how they are impacting the traditional brick-and-mortar retailers [is significant],” he said. “When you look at pricing patterns from Asia, every single one of the markets except Hong Kong and China pretty much collapsed in the first half of last year. And that’s kind of what led me to understand what was going on.” Tech challenges Digitalization has a growing presence in air cargo with an increased focus on AI , Lossing said. AI integration will play a major role in air cargo this year but lags other industries, he added. “Air cargo isn’t known to be the forefront leader,” Lossing said. “But I think, you know, companies will continue to ask how they can leverage AI, predictive analytics and machine learning to improve their operation, forecast demand and potentially shift to more dynamic pricing.” The industry still faces challenges to using AI due to efficiency and implementation issues, Schlossberg said. [caption id="attachment_57139578" align="alignright" width="409"] (Courtesy/Can Stock)[/caption] “I think airfreight is probably one of the more opaque industries in terms of digitization and transparency,” he said. “And sadly, it probably is one of the [industries] that can benefit the most from it. But there are too many handshakes and deals outside of what’s transparent.” Many processes in air cargo operations are difficult to digitalize, Schlossberg said. “If I’m mixing density cargo and volumetric cargo together, how do you put that into a model online? It is advancing slowly,” he said. “Various platforms have moved forward; it’s more than it was. More airlines are putting their capacity availability online. [But] it’s still too cumbersome. It’s not as efficient as it needs to be. So, these are still hurdles to be overcome from the technology standpoint.” Air cargo is likely to see influential advancements in automation, robotics, AI and Internet of Things, DHL Global Forwarding’s Robertson said. “AI, in particular, holds immense potential for transforming various aspects of the supply chain, potentially triggering substantial changes in areas like robotics,” he said. “Currently, [DHL Global Forwarding] is actively implementing AI in specific domains, and [we] have witnessed its efficacy in enhancing efficiency and effectiveness. For certain functions, such as general administrative processes, we are anticipating advancements as software providers incorporate AI-driven features into their offerings.” This year, DHL will use automation and sortation technology, robotics, and autonomous equipment for warehousing operations, customer-facing applications and eco-friendly vehicles as part of its strategy to remain tech-forward, Robertson said. “Our ongoing investment in digital capabilities reflects our dedication to staying at the forefront of technological innovation,” he said.

Sizing up 2024: Trends to watch, new tech and e-commerce growth

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