Of the 3.69 million Americans that will be flying to their destinations this holiday season (source: AAA) – how many are aware that their luggage might be sharing the belly of the plane with additional cargo? Regular schedules and dedicated space below the plane make commercial airlines an attractive option for couriers looking for a fast shipping method.
Thanks to a boom in eCommerce and an increase in demand for time and temperature sensitive items, the airline business has begun to fill commercial flights with more cargo than ever before. This increase is largely contributed to growing global trade – as it’s expected to grow between 2.1 – 4 percent in 2018 (source: WTO). Air freight is bouncing back from declines - meanwhile, ocean freight rates steadily decline as container mega ships offer a container shipping supply that far outweighs the demand.
According to the IATA, in February 2017 there was an 8.4% increase in air freight demand – measured in freight tonne kilometers (FTKs), compared to the demand of the same period last year. Once the impact of leap year in 2016 was factored in, it was determined that air freight demand actually increased by 12% in February 2017 -- a number four times better than the five-year average rate of three percent.
Airlines across the board are reporting an increase in cargo revenue, too. Delta Air Lines said their cargo revenue grew 11 percent in the third quarter, to $187 million. United Airlines also predicted cargo revenue to lie somewhere between $245 million and $265 million – a number 14 percent higher than the previous year.
High value electronics used to be the leading export to impatient consumers in the West, originating from cheap manufacturing locations in Asia. However, the total weight of these items being shipped has gone down in recent years – partly due to the items shrinking in size, but mostly due to the increased proximity of final assembly lines to customers.
On the contrary, the market for fresh food is one that is thriving and only expected to keep growing. The number of perishables such as fruit, vegetables, and flowers being flown has risen by a third since 2007 – more than any other category of product. A decade ago, the Chinese would only eat seasonal produce – but now, they can afford to fly in the fresh food of their choice. For example, they fly in red cherries from Chile for the Chinese New Year. While the weight of computing equipment riding by plane has decreased by a tenth, the weight of fresh food traveled has increased by that same amount. Items such as flowers, salmon, and milk powder have seen some of the strongest growth.
Surprisingly, only about one percent of exports by volume go in aircraft. However, due to these items being the most expensive goods, they account for a hefty 35 percent of global trade by value.
When passenger demand rose, this incentivized airlines to purchase more planes. The additional cargo capacity that came with these planes flooded the air freight industry and caused prices to slide. Despite this, the ecommerce industry continues to expand (it’s predicted to grow by 21.1 percent in 2018 according to Statista.com) and consumers continue to demand faster delivery times (23 percent of consumers say they are willing to pay extra for same-day delivery). Ultimately, the mood towards air freight and its growth remains carefully optimistic.
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