Intercontinental air cargo capacity is likely to remain constrained for the next five years. That is partly due to insufficient new belly capacity entering the market but also delayed entry into service of all new-build and passenger-to-freighter conversion programs. If demand proves to be resilient, rates and profits are likely to remain above their historical average. That is good news for those who have aircraft deliveries locked in, but all others seeking to expand will have to wait or utilise less efficient or suboptimal equipment. This article discusses the outlook for air cargo capacity and demand through to 2030.
Posts tagged as “E-Commerce”
Shein’s recent IPO prospectus is instructive in many ways. It confirms that cross border e-commerce is not such a great business. Other platforms such as Temu, AliExpress and Amazon can afford to either lose or make very little money from their international operations thanks to large profitable domestic and cloud computing businesses. Changes in the customs treatment of low value direct shipments from China are already leading to fundamental changes the way cross border fulfilment functions. Lastly, it shows how precarious the relationship is between the global air logistics industry and a segment that accounts for almost one fifth of intercontinental airfreight. Time to start thinking about the future.
The party never ends. Just as cross border e-commerce volumes were slowing down, the air cargo business received a major boost from data centre related shipments. But the boom in unevenly distribution with most of the growth taking place on transpacific lanes into the US. Europe – which currently accounts for about 30% of all data centres worldwide – has not seen a noticeable up-tick in traffic.
2025 looks to close with international air cargo traffic growth of somewhere between 3.5% - 3.8%. That is around the low end of we were predicting at the beginning of the year, but much higher than our revised outlook compiled in April. For next year we are predicting a range of 1.8% to 5.5%. Average annual growth through to 2030 could range between 2.7% and 4.7%. Much of the future trajectory is contingent on continued growth in cross border e-commerce volumes. Industry profits will depend on the delicate interplay between demand, capacity, yields and costs. This article takes stock of the current year and discusses some of the factors that will shape international air cargo the coming years.
An increasing share of international air cargo and most of the industry’s growth expectations are riding on the movement of low value cross border e-commerce items, mainly out of China. The five major platforms have massively increased cross border volumes over the past 3 years and while the transpacific has copped a beating over the past months, growth to Europe and some other markets has more than made up for that. However, e-commerce companies consistently lose or make very little money on this business. That is a problem that the air cargo industry needs to think about. This article looks at the international operations of Alibaba, Amazon, eBay, Pinduoduo, Shein with a focus on the financial performance, geographical scope and implications for the air cargo business.
Air cargo is generally not a good business. At least for airlines who take most of the long-term capacity risk. In the last five year the business went from dull to awesome. Many companies made more profit in the last five years than in their entire history. The first half of this year was pretty good and companies continue to naively believe that everything will be ok. We take the view the ice age may be just around the corner. Or at least go back to being dull. This article looks at the different Eras in the life of air cargo and outlines some scenarios that could unfold over the next years.
The Australian international air cargo market generated about 1.15m tonnes in the last 12 months, with inbound accounting for almost 60% of this. If recent growth in inbound cross border e-commerce traffic continues then the market could grow by almost 5% per year for the next five years. Exports could grow by as much as 4% if volumes recover to the 2018 peak levels. Without this we would expect lower growth rates for both imports and exports of around 1% per year. This article discusses long-term Australian air cargo market trends our latest forecast for inbound and outbound air cargo between 2025 and 2030.
Global trade is (again) in a phase of major disruption. Yet the commentary around the most recent quarterly company announcements shows that while engaging in tactics, businesses are failing to develop long term strategies. Yet much of what is happening should not come as a surprise and is consistent with longer term trends that have emerged over the last 10 years or so. Focusing on the air logistics business, this article examines the strategic choices that companies need to make to remain competitive.
International air cargo growth continues to be highly reliant on cross border e-commerce traffic originating from China. We estimate that about 35% of international air cargo currently consists of express small package and cross border e-commerce consolidations – up from about 26% five years ago. Future air cargo growth expectations continue to ride on cross-border e-commerce rather than traditional global supply chain traffic. We forecast international air cargo growth of between 2.8% and 5.5% for the next five years. This article discusses growth drivers and downside risks.
The US domestic air cargo market today is about as big as it was in early 2017 – despite a boom in e-commerce. After growing at about 3.7% per year between 2012 and 2021, flown traffic has dropped by almost 20% since early 2022. The bad news is that we may see more declines in the next 18 months. The good news is that declines are likely to be more moderate. This article looks at the outlook for the US air cargo market and discusses what it means for the demand for air capacity.