Land and ship cargo transportation is as favorable and popular but are old school options for many people. As the name suggests, air freight logistics is the transfer and shipment of goods via an air carrier, which may be charter or commercial.

This is a good choice in the business of logistics as shipments can be sent from commercial and passenger aviation gateways to anywhere that a plane can fly and land.

Goods transported by air also have the advantage of high speed, time sensitive shipments to anywhere in the world. Air transport is also invaluable to smaller and mid-sized companies as it allows them to participate in international trade in an expeditious and effective manner. Furthermore, air freight offers the highest level of security as airport controls regulate and manage all cargo entering and leaving certain areas.

According to the IATA, cargo volumes grew by 4.1% to 63.7m tons in 2018. A slowdown in global air freight markets occurred as rising fuel prices and weakening trade drove a decline in demand that began at the end of last year.

In terms of freight tons-kilometers (FTK), air freight returned to a growth pattern in March 2019 after three months of year on year declines. The industry forecast suggests that it will be 65.9m tons in 2019. And of the year, overall cargo revenues are expected to reach US$ 116.1bn in 2019, up from US$109.8bn in 2018.

The future is also looking bright for air freight. Estimates say that the volume of freight sent by air will increase by around 3% every year for the next decade. Recent increases in air cargo revenue and tonnage is due mainly to a boost from e-commerce, the growth of cargo services in emerging markets, and technological developments in both new aircraft technologies and the digitization of the industry.

The rise in air cargo volumes comes as good news for air freight companies as well as for air freight forwarders who mediate business between shippers and carriers. However, a strong market doesn’t mean that problems and challenges aren’t brewing on the horizon.

As carriers line up to buy freighter aircraft, and belly hold capacity expands in line with passenger operations, air carriers will start to experience increased price pressure, at a growth rate of three percent per year. This means that profits made by the overall net gain in volume could be entirely negated due to competitive pricing.

Additionally, the air cargo industry is facing serious disruption through digitalization which will change the way the industry operates as a whole. New technologies can provide invaluable resources to an industry, but their disruptive nature can also make it hard for some companies to adapt, whether it be due to cost constraints or the challenges of implementation.

So, there are two areas of change which could impact the industry and its potential profitability. These are regulation and technology. These either have the ability to throw multiple wrenches in the work for air freight or improve efficiency and cost effectiveness to the point where it becomes the method of choice for sending goods across the globe.

Shipping technology covers a wide spectrum of innovation from digitization to automation. The internet has also had a huge impact on the market and will continue to do so. Traditional players on the market who are not on board with the latest technology could find themselves overtaken by more tech savvy companies. As technology develops, so must regulation in order to keep up with new innovations and new challenges.

The future success of the air cargo industry is going to depend on stakeholders’ ability, throughout the supply chain, to adapt to these changes with speed and agility, and to form strategic partnerships. The challenges ahead are otherwise too complex for any company to win on its own.

First threshold: technology impact

Technology will change the whole way that the air freight industry is run, and if companies do not adapt, they may be left out the race. Technology is transforming the market in multiple ways; from drones, the use of big data and artificial intelligence (AI), automated systems to augmented reality (AR) and robotics. All of these, if used correctly and cohesively, have the potential to make air freight forwarding cheaper, safer, and easier.

E-commerce has been an advantage for the industry. But the speedy and efficient delivery of domestic and international shipments of e-commerce packages is still a problem. As air cargo continues to transform quicker than ever before, the industry will have to look to technology to automate processes, raise levels of data quality, facilitate information-sharing and streamline compliance requirements.

Autonomous flight in the near future

Traditional companies in the market are facing a rise in pressure to go digital from a number of different fronts. Driverless cars and the rapid progress of unmanned air vehicle (drone) technology have opened up new possibilities for air freight forwarding. One of the most exciting innovations in this industry is the work being completed by Boeing to develop autonomous air travel. By early 2018, Boeing HorizonX had completed early stage flight tests of unmanned cargo aerial vehicles (CAV). This means that we are going to the future of autonomous flight. This research coupled with Amazon’s plans for drone deliveries are an interesting development in the possible future of the air cargo market. Amazon is creating future aircraft technology to develop safe and efficient drone delivery. The delivery system is called Prime Air and when fully developed will be able to get packages to customers in 30 minutes or less using drones (or unmanned aerial vehicles).

Many different companies are working on this technology all over the world especially in China. The Chinese Academy of Sciences modified and successfully flew an unpiloted PAC P-750 XSTOL turboprop plane in 2017. Now some of the most exciting future aircraft are being developed by China. The BKZ-005 unmanned aerial vehicle was tested in this year. The self-flying planes will carry up to 1.2 tons of cargo over 745 miles at an altitude of over 16,000 feet.

China’s Beihang UAS Technology established a partnership with Garuda Indonesia which will see the national airline carrier using three BKZ-005s to transport cargo in Indonesia. Plans are to eventually take delivery of 100 cargo UAVs to connect Indonesia’s more remote regions that have a limited airport infrastructure. Whilst this is a relatively new idea, the digitization of the air freight market is not a new phenomenon.

Future of cargo aircraft

Belly cargo capacity in passenger aircraft increased 27% between 2010 and 2015. Boeing says that despite this increase, freighters will continue to transport more than 50% of the world’s air cargo for at least another two decades. This is due to their ability to reliably offer highly controlled transport, and their unsurpassed capacity in terms of volume, dimensions and hazardous materials. In a five-year period from 2010 to 2015, large freighters in operation increased by 8%.

Around 40% of wide body freighters are operated by express carriers to connect their door-to-door transportation network. In 2015, wide body freighters generated 40% of air cargo industry revenue. Restrictions on the range capacity of fully loaded passenger flights as well as the number of routes serving high-demand cargo markets will continue to make freighters the cargo plane of choice for the foreseeable future.

Paperless era in the air cargo market

Like a lot of industries, air freight forwarding is starting to reduce the use of paper and printed materials. A digital approach is also more attractive to clients. It provides a cost effective, efficient, and environmentally friendlier way to ship, as well as there is much less room for human error. Paperless air freight forwarding has multiple benefits. It’s greener, for a start.

The IATA’s goal is a paperless process and “smart data sharing”. The arrival of apps and software for freight forwarders, that allows everything from invoicing to freight tracking to be done digitally, means that a paperless future is a possibility.

Physical paperwork is also more arduous, while user friendly apps and software save time and energy. It also means that all of the information needed is at their fingertips wherever they are.

While some Freight Forwarding solutions have been using digital methods like e-awb for years, online registration is currently only offered by around 60% of forwarders. It’s clear that in order to compete, freight forwarding companies need to go digital. However, there are no clear guidelines on how to do this, and how to roll it out to customers.

Digital is vital to the industry, but it requires a shift in thinking and in the business model to keep air freight forwarders competitive and to give customers what they want.

Emphasizing the areas in which a company already excels is a great differentiator from the competition. By complimenting that strength with digital technologies, companies will have a better chance of standing out.

Second threshold: regulation impact

IATA identifies regulations around facilitating trade as important to the future of air freight. The market needs smart regulations to support increased trade alongside safety and compliance. As the nature of air freight forwarding changes, the regulations surrounding it will need to adapt, too. Players of the market will expect greater speed, simplicity, ease, traceability, and transparency. The IATA sees regulations surrounding the industry increasing, and hopes that this regulation will be “smart, balanced, and data driven”.

One thing that hasn’t changed is the prioritization of safety. New innovations must be considered, how do we keep the general public safe if freight forwarding is automated, or if items are sent by drone?

Another important thing is that there is an even greater need for the industry to collaborate with state regulators to ensure that regulation moves with the times and does not slow down transit time.

Regulation and technology both put their own pressures on the market. So, this mean that strategic choices need to be made more carefully in order to succeed. Digital must be embraced, regulation must be adhered to and collaboration must occur to ensure that this regulation does not drag businesses down. Without this, the bright future that the air freight market currently has could diminish.

Which markets lead in air cargo growth?

Air cargo traffic between the emerging markets of Asia, Africa, the Middle East and Indian subcontinent are forecasted to increase by 6% in the next 10 years, and at about 5% in the next 20. Rapid economic growth in Asia-Pacific markets will continue to lead annual air cargo growth, with China rapidly increasing its fleets of cargo planes and air freight volumes, while also growing its air route networks. The China air cargo market has demonstrated an 8.7% year-on-year increase – far above the global air cargo transport average.

Boeing predicts that China will need an additional 200 cargo planes and 470 converted freighters in order to keep up with the next two decades of growth in the cargo industry.

The health of global air cargo charter and the global economy is largely dependent on connectivity. With China’s rapidly growing economy (including their e-commerce sector), expanding middle classes and a number of new general and cargo airports in the offing, the future of the air cargo industry in China is expected to continue on a growth trajectory.

Where is Turkey in the air cargo market?

According to 2017 ICAO data, Turkey ranked 12th on the world`s total paid-scheduled ton-km (passenger-freight-mail) list and 8th on the international flight list on the basis of paid-scheduled ton-km. Freight transportation, which was stable between 2010 and 2013, showed a steady upward trend after 2014. While the annual freight volume in 2009 was 42.3 million tons, it was 63.7 million tons in 2018.

According to 2017 figures, considering both national and international services, the USA, China, UAE, South Korea and Qatar took place on the world’s top 5 list in paid-scheduled freight-ton-km. Turkey ranked 13th on this list. In terms of international services only, the USA, UAE, China, Qatar and South Korea are the top 5 countries on the list of countries whose airlines performed the farthest freight transportation.

According to DGCA 2018 figures, the number of Turkish registered air freighters is 29. The ratio of air freighters to total 515 aircraft is 5.6%. The total freight capacity of the 29 air freighters is 2,194,450 kg. The distribution of the 29 air freighters is as follows:

• 11 Airbus A330

• 5 Boeing 777

• 5 Airbus A300-600

• 5 Boeing 747

• 3 Airbus A310

In 2015, the total freight traffic (cargo + mail + baggage) was recorded as 3,072,831 tons; 871,327 tons in domestic flights and 2,201,504 tons in international flights, whereas in 2018, it was recorded as 3,855,231 tons in total; 886,025 tons in domestic flights and 2,969,206 tons in international flights.

It is observed that the increase in passenger traffic in our country was also reflected in total freight traffic. In 2015, the total freight traffic was recorded as 904,762 tons; 101,447 tons in domestic flights and 803,314 tons in international flights, whereas in 2018, it was recorded as 1,388,623 tons in total; 52,807 tons in domestic flights and 1,335,815 tons in international flights.

Turkey`s goal: to become one of the world`s top three hubs!

According to figures provided by İlker Aycı, the Chairman of Turkish Airlines, during the International Transport and Logistics Service Providers Association (UTIKAD) Summit held in October 2019, Turkey`s port to port air freight market has reached US$ 3 billion. With the addition of back services, the market value is thought to have increased to US$ 5 billion. Turkish Cargo has the largest share of the air freight market in Turkey and has grown by 80% percent over the last three years, flying to 86 countries with its air freight fleet of 24 freighters. Having stated that Turkey rose from 7th to rank 13th in air freight worldwide, Aycı expressed that the goal was to enter into the top five first and then into the top three.

Transit market is of great importance!

The Transit cargo market is also very crucial for Turkey, because 20% of Turkish Cargo`s revenue is derived from Turkey`s exports and imports, and the remaining portion is obtained from transit transports. While Turkey`s foreign trade transport is expected to fall to 12% in the upcoming years, Turkey’s share in the global market now is 4% and this share is intended to be increased to 7% in order to take place in the top five. Considering the fact that Turkey can reach over 60 capitals via just a 7-hour flight from Istanbul and has 40% of the market, it is as simple as a pie for Turkey to get a bigger slice and play a far greater role in the air cargo market in the future