ISTAT Jetrader - Winter 2021 - 39

E-commerce will continue to drive much of the future
growth in air cargo volumes and the demand for freighter
aircraft in particular. E-commerce logistics are predicated
upon speed and reliability in end-to-end transport, and
therefore are very much dependent upon air cargo. Amazon
Air's freighter fleet is growing in leaps and bounds, growing
to more than 80 aircraft since its launch in 2015, and it
is further expanding its own-controlled capabilities by
acquiring a minority stake in freighter operator ATSG and
warrants to buy shares in Atlas Air and Sun Country. Amazon
alone is responsible for much of the order backlog for
P2F conversions.
Other major global e-retailers are expected to follow
in developing own-controlled aircraft capacity, further
stimulating demand for freighters. JD.com has announced
plans to operate at least 100 freighters by 2030.14
Smaller
e-retailers are expected to continue to increase demand for
air shipments on passenger and all-cargo airlines as well as
on integrated express carriers.
Other developments bode well for future freighter
demand. A number of passenger airlines, including Air
Canada, WestJet, LATAM, IndiGo, AirAsia and S7, are adding
freighters to their fleets to take advantage of burgeoning
cargo demand - a major change in direction compared to
the previous 10-15 years when combination carriers such
as Air France/KLM, Singapore Airlines and EVA Air had
been reducing their freighter fleets. Several large, global
freight forwarders, including DHL Global Forwarding, DSV,
CEVA, Geodis and Flexport, have launched own-controlled
freighter operations as well, aimed at securing reliable
capacity, as well as capturing high-value/high-yield cargo
commodities ( " verticals " ) and driving that traffic to their
most important airport gateways. CMA CGM Group, the
parent of forwarder CEVA Logistics, plans to secure its own
air operator's certificate in 2022 and has ordered new-build
777 freighters.
While the outlook for air cargo demand over the next
several years is bright, there are some longer-term threats,
including the potential for some lower value, less timesensitive
air cargo commodities to migrate to surface modes
if air cargo yields remain elevated. One example is the AsiaEurope
trade lane, where China's Belt and Road Initiative is
stimulating material investment in rail, road and maritime
infrastructure, increasing the potential for modal shift from
air to surface.
Conclusion
In a nutshell, the outlook for air cargo remains strong overall.
There are changes of enormous consequence occurring,
14. Air Cargo News, JD Logistics eyes a fleet of 100 freighters, Damian
Brett, October 19, 2021.
Jetrader * WIN TER 2021 * 39
with air cargo generating significantly higher revenues and
returns than before. These changes are durable and will
not abate as long as there is strong consumer demand for
e-commerce. Cargo is likely to represent a higher share of
revenue for the airline industry as a whole well into the future,
and a critical contributor to the profitability of passenger
aircraft operations.
As passenger demand returns post-pandemic, cargo's
share of total airline revenue will decline somewhat but
will likely remain more important than pre-pandemic. As
such, we expect air cargo to play a more significant role in
passenger airline strategic decisions going forward, including
network and fleet planning, and it will attract additional
airline investment across all elements of the service chain -
including aircraft as well as infrastructure and services on the
ground, end-to-end product offerings tailored to high value
commodities, and data and information systems.
Mark Diamond is a vice president with Strategic Aviation Solutions
International (SASI), an air transport consulting firm focused on air
cargo and logistics, offering a full portfolio of advisory services to
a global client base of airlines, airports, manufacturers, financial
institutions and governments.
http://www.JD.com http://www.internationalaircraft.com
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