REPORT: Global air freight future looks bright

Freighter market is rare bright spot, fuelled by boom in online shopping, supply chain disruptions, and a drop in passenger flights

Cargo delivers medical supplies for India’s healthcare emergency_ENG
(PHOTO: Cathay Pacific Cargo) law firm Reed Smith recently released a report that analyses the changing aviation industry landscape following two turbulent years and offers insights into what challenges and opportunities air freight companies can expect in 2022 and beyond.

Download the full report here.

Entitled the ‘Global air freight’s future – The sky is the limit’, the report highlights the trends changing the shape of the air freight industry, such as new technology, environmental considerations, the challenges of passenger-to-freighter conversions, developments in electric vertical take-off and landing (eVTOL) aircraft, changes in legal governance, and new legislation. 

Airlines and lessors around the world are converting passenger planes to freighters. (PHOTO: Airbus)

Key takeaways from the report: 

  • Drone technology offers unique long-term logistical, cost-saving, and environmental benefits. 
  • Freight pricing will remain buoyant due to the limited supply and low conversion rate of freighters. 
  • $8 billion of capital has flowed into the development of eVTOL aircraft over the last five years, with the cargo market expected to reach $58 billion by 2035. 
  • The passenger-to-freighter conversion market is growing, with roughly 750 conversions projected over the next 20 years. 
  • Airlines must focus on maintaining high cargo revenue in tandem with passenger flights. 
  • Investment in newer, more fuel-efficient aircraft is increasing. 
  • Three kinds of cargo-related liability claims are on the rise. 
  • Fuel price volatility is expected to have more impact on international aviation than carbon offsetting costs; however, offsetting costs will inevitably need to be pushed onto customers, creating new price pressures. 
  • Customs authorities are increasingly looking at carriers when it comes to enforcement at the border and liability for noncompliance. 
Airlines around Asia are counting on cargo to help them through the pandemic. (PHOTO: Cebu Pacific)

Richard Hakes, co-chair of Reed Smith’s aviation group and London-based partner, said: “After losing two years of air passenger growth to the pandemic, the industry has seen the freighter market as a rare bright spot, fuelled by the boom in online shopping, supply chain disruptions, and a drop in passenger flights. There are, at least, indicators that some of the pandemic-driven boon to air freight will continue, and environmental trends are also working in favour of new, more fuel-efficient freighters. Such a lot has changed over the last two years and while we may not be able to predict the future, if we can identify where and how we should be putting attention and resources, and, using our collective capabilities and experience, hypothesise on what might be round the next corner, then we will be in a better place to support our clients in the industry.”

Changi remains a key cargo transshipment point for Asia. (PHOTO: Singapore government)

The report explores dynamics in four key areas for the aviation industry, splitting these into chapters titled: Looking forward to tomorrow’s world, Business continuity – ensuring a solid business model, Avoiding unnecessary disruption, and Navigating the given external considerations. 

Simon Spells, who leads the aviation practice in Asia for Reed Smith, said: “The freighter market has been a focus sector for many of our clients over the past 24 months, and our experience across the breadth of our aviation group has provided us with unique insight into some of the key dynamics currently driving the changes in the air freight industry. We hope the report helps industry participants by providing them with the benefit of our experience and insights on those current key dynamics.”

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