Quality of infrastructure hikes air cargo traffic
Past few years have been a roller coaster ride for the air cargo industry with companies adopting technologies to adapt to increasing demand for moving essentials. The quality of the infrastructure similarly plays a significant role in attracting cargo traffic.
- Abigail Mathias
Air cargo is one of the most effective means of transportation. Not only is it quick, but it is also safe. While 2-3 per cent of total cargo volume travels by air each year, that small amount accounts for approximately 35 per cent of total cargo value. Annually, that equates to over US$6 trillion worth of goods that rely on the air freight industry for its speed, security, and reliability.
Air cargo is utilized overwhelmingly for products in five sectors — equipment, consumer electronics, pharmaceuticals, healthcare, and retail products sectors — which comprise nearly 90% of total air cargo. However, air cargo is used by companies across market sectors and geographic regions to connect them to new customers and suppliers that would not otherwise be accessible.
Air cargo largely contributes to the success of many stakeholders at or around the airport, including its customers: airlines. In fact it is an important enabler of global trade and an engine for local, regional and national economic development. This translates into employment opportunities created across various industries that rely on import/export activity.
Not all airports benefit evenly from cargo development. Cargo traffic requires a combination of multiple factors to grow, namely: strong connectivity, robust infrastructure and quality processes. Connectivity is among the most important of factors – the availability and quality of air cargo capacity is central to the airport’s role as a cargo gateway or hub. Leading cargo airports boast wide network coverage with diverse options of airlines and capacity types (freighter and bellyhold).
The quality of the infrastructure similarly plays a significant role in attracting cargo traffic, as sufficient capacity is required to minimise ground handling-related delays. This means that those airports that have up-to-date cargo terminals are in a better position to compete.
In addition, availability of special handling facilities, especially for the cold chain, is an essential factor in attracting perishables and pharmaceuticals cargo traffic. We explore what leading cargo experts say.
Tim Isik, Vice President, Commercial, Etihad Cargo
It is certainly an interesting time for air cargo right now. The market is challenging as it begins to normalize. Our focus will be to build and leverage on partnership that we have in place and help to grow the eco system here in Abu Dhabi. Over the recent years, sustainability has become a hot topic in the aviation sector, and it will remain to be a priority for the air cargo sector. We are responsible for developing and providing more sustainable solutions for our partners and customers, not only for the benefit of our own operations but for the wider industry and the world.
Fabrice Panza, Manager, Global Cool Chain Solutions, Etihad Cargo
Etihad Cargo has continuously invested in and added features to our premium product range, including PharmaLife for the shipment of pharmaceuticals, healthcare or life sciences commodities, and FreshForward for the shipment of perishable fresh produce, including fresh fruits, vegetables, dairy, fish, meat and flowers. Ensuring the smooth, efficient, safe, and on-time delivery of perishable and pharma cargo is precisely why Etihad Cargo became IATA CEIV Fresh and Pharma certified, becoming one of the first Middle East airlines to hold both certifications and one of only two carriers globally to have achieved this dual honor in the same year.
We ensure perishables are delivered in the best condition possible through processes that provide visibility and offer robust traceability and tracking. Through the adoption and utilisation of digital traceability, we work with our clients to help them validate the authenticity of product safety, provenance and health or sustainability claims. The technologies we use and processes we follow ensure the data we collect, track and share unrivalled visibility across every stage of perishable cargo’s journey.
Chaminda Perera, General Manager, SriLankan Airlines Cargo
Air cargo is the fastest method of shipping and is, therefore, preferred for transporting perishables and temperature sensitive cargo as the freshness and quality of products are guaranteed to remain intact. Reliability of arrival also makes air transport more attractive, especially for time-sensitive pharmaceuticals; spare parts and high-end items, including mobile phones and designer wear.
Statistics reveal that air cargo amounts to 35 per cent of trade by value although it is less than 1 per cent of world trade in terms of volume indicated that air cargo is the preferred choice of shipping for high value items. Air transportation allows manufacturers to make up for time lost in production delays and meet delivery deadlines. The growth of the e-commerce industry is also having a positive impact on air cargo.
SriLankan Cargo, the cargo arm of SriLankan Airlines, is equipped with qualified staff and advanced storage facilities and equipment at its Colombo hub and across the network, to transport different types of cargo. In 2022, SriLankan Cargo transported 56,000 MT of cargo, out of which 43 per cent was perishable cargo and pharmaceuticals. Significant volume of dangerous goods and high-tech goods were carried by SriLankan Cargo in the same period.
Additionally, SriLankan Cargo provides air shipping services for auto parts, online retail goods, banknotes, precious stones, jewellery, live animals, live human organs, and human remains. Such live and temperature-sensitive cargo will be stored and ferried under certain conditions of temperature, security, and safety supported by cold storage facilities of SriLankan Cargo’s and live animal center and security vaults.
The jet fuel prices have gone up over the recent past, and it is the operational cost in the aviation industry. SriLankan Cargo took up many cost-cutting steps to manage the impact of rising jet fuel prices, including recovering a portion of the cost through pricing. The airline is focusing on expanding its reach across the globe through codeshare pacts with freight operators to evade belly capacity limitations in passenger aircraft. It has expanded the network beyond its routes to 200 destinations with 44 interline partnerships, besides codeshare and interline partnerships. SriLankan Cargo is in the process of partnering with eBooking platforms to further expand its reach.
Prashanth Balakrishnan, General Manager, Orient Cargo
The choice between mode of transport depends on several factors including cost, speed, reliability, safety, destination, size, and nature of the goods, and required delivery time. Here is a quick comparison of these options:
• Air cargo: fastest mode of transport, suitable for urgent and high-value goods, but also the most expensive
• Sea cargo: cost-effective and suitable for large shipments, but also the slowest and less flexible
• Road cargo: flexible and suitable for door-to-door delivery, but also the most vulnerable to traffic disruptions and road conditions
• Rail cargo: faster than road cargo and more reliable than sea cargo, but also less flexible and has limited reach.
In general, the decision to use a specific mode of transport depends on the trade-off between cost and speed, as well as the specific requirements of the shipment. If time is critical and cost is not a major concern, air cargo is usually the preferred option. If cost is the primary concern and delivery time is less important, sea cargo is usually the better choice. It is important to assess all the relevant factors and consult with a logistics provider to make the best decision for your specific needs.
Air cargo is considered the most effective means of cargo transportation for several reasons:
• Speed: air cargo is the fastest mode of transportation, allowing for the delivery of goods in a matter of hours or days
• Flexibility: air cargo can reach destinations that are not easily accessible by sea or land, making it ideal for remote or time-sensitive deliveries
• Reliability: air cargo has a high on-time delivery rate, making it ideal for perishable or time-sensitive goods
• Safety: air cargo is considered one of the safest modes of transportation, with strict security measures in place to ensure the protection of goods
• Convenience: air cargo allows for consolidation of shipments from multiple locations into a single flight, reducing the need for multiple trips and increasing efficiency
• Control: air cargo offers the ability to track shipments in real-time, providing greater visibility and control over the transportation process.
• Global reach: air cargo has a global reach, connecting major cities and commercial centers around the world
Overall, air cargo is considered the most effective means of transportation for urgent, high-value, and time-sensitive shipments.
Air cargo is used to transport a wide variety of items, including:
• High-value goods: items such as precious metals, jewellery, electronic devices, and high-end luxury goods
• Perishable goods: items such as fresh produce, seafood, pharmaceuticals, and medical supplies
• Time-sensitive goods: items such as machinery parts, automotive components, and computer components
• Hazardous materials: items such as chemicals, flammable liquids, and radioactive materials
• Oversized items: items such as large machinery and heavy equipment that cannot be transported by road or sea
• Airmail and documents: letters, packages, and other documents that require fast delivery
• Retail products: items such as clothing, footwear, and consumer electronics
It is well known that the UAE is a major trade hub in the Middle East and a key player in the GCC market. The UAE has been actively working to diversify its economy and increase exports, particularly to its neighboring countries in the GCC nations. Exports from the UAE to the GCC include petroleum and petroleum products, machinery and equipment, chemicals, and precious metals. The UAE’s strategic location, advanced transportation infrastructure, and supportive trade policies have made it an attractive destination for foreign investment and a hub for trade and commerce in the region.
Fysal Karatt, Managing Director, Rajab Xpress
We have witnessed a phenomenal level of changes within the logistics and cargo industry. These innovative developments have only enhanced the working of the industry which is tech-savvy and able to cope with challenges that were unheard of in the past.
Our company was established in 2001 as a reliable international freight forwarder that manages the movement of cargo to both domestic and international countries. The air cargo is widely regarded the quickest means of moving goods.
Saurabh Bhalla, Managing Director, Air and Sea Logistics
The biggest advantage shippers gain when shipping air cargo is speed, which can be as fast as same-day delivery. This mode of transportation offers the fastest shipping times, as well as reliable arrival and departure times. When speed is the essence then air freight is the preferred mode of transportation. A recent example was the aid material for the earthquake relief dispatched to Turkey in a matter of hours.
Reliable arrival and departure schedules: the arrival and departure timings of the airlines are mostly fixed and airlines are proud to advertise a near 98-99 per cent on time record. When you need the goods to be delivered on time this is the most favorable mode.
Wider coverage: A m ajority of airlines are able to deliver to a wider network even with inter- airline agreements and you have a wider choice to reach a destination. Some insurance cover even if the goods/services are not insured—air freight costs are high and even without insurance you can received a small amount from the carriers.
Less prone to pilferage: Shipping by air offers the advantage of a high level of security, as the airport safety controls over cargo are tightly managed. Managed airport controls cut the exposure to theft and damage. As the transit times are quicker one does not need to store expensive materials in warehouses and can move goods to arrive.
Due to the nature of the goods carried by air they require less packaging than traditional items shipped by sea. It’s a norm for all companies to provide tracking and trace abilities for you to know where your goods are and when they are expected to.
Mohammad Jaber, COO, DSV Global Transport & Logistics, Abu Dhabi
We all began to understand the necessity of air freight during the pandemic when airports were not working to full capacity. Air cargo became the in demand transportation for healthcare and food security items. A lot of cargo was transported by passenger aircraft, which were converted to cater to the demand. After COVID, the passengers came back and the capacity for air cargo reduced considerably, but it is on the rise again.
As a forwarder, we must know how we can optimize the volume ratio and reduce the gas emissions per kg. When the aircraft flies, we need to see how we can optimize the loads. It will help the user to reduce cost. How we can use more sustainable resources and how we can use sustainable elements in the industry to build aircraft. Handling element is critical. Cargo is mostly touched during loading and discharging. That should be consistent on both sides in terms of food security or pharma and healthcare.
Chamath Nawaratne, Vice President, v and CPO, Africa, Middle East, India
The growth of air cargo depends on the ability to demonstrate. We can deliver door to door. We all know that aircrafts can deliver the good in a few hours, but the challenge is in getting that cargo out of the aircraft and delivering them to the customer. That is where air cargo needs to network with partners who offer the last mile delivery. Air cargo suppliers need to look at the customers to provide the total value to the supply chain.
In terms of the logistics and supply chain industry, today with fuel surcharges fluctuating, capacity is a big challenge. Getting a rate is also a big challenge. I believe many cargo solution providers are having instant quotations and instant bookings. This should be well informed to the customer because if they are using air cargo, there is already a sense of urgency. How we can get that across is through technology.
Sara Omer, Account Director, FCIPS Ivalua
In the supply chain, the most crucial thing is the forward planning and the forecasting. Within this, organizers factor in the delivery time and freight—be it air or sea freight. We need to have a visibility across the supply chain in case we have longer shipping times. When we are building our buffer stocks, we had to add this ‘egg-shell’ component.
Due to uncertainties in certain regions, we might need to expand more and have the visibility as procurement and supply. There needs to be a good level of collaboration and transparency between us and the cargo providers who are the ones who see things coming from their side.
It might impact us revisiting how we do our stock planning and our forecasting which is where supply chain and procurement is focused on. Logistics serve them as their customer on ensuring that they fulfil these forecasts.