AIR CARGO: In the air tonight

As global shipping continues to face disruptions, is a new era dawning for air cargo?

AFTER several years navigating the Covid-19 period and its aftereffects, the global air cargo industry saw a growth in demand in 2024 that exceeded some expectations.

With growth in e-commerce and rising demand for time-sensitive goods, and ocean freight suffering continued disruptions including the Red Sea crisis and port strikes, air cargo globally has capitalised. In Australia, a country highly dependent on conventional sea trade, air freight’s medium-term prospects appear encouraging, although with unique conditions and nuances influencing the sector’s projected direction.

As maritime continues to grapple with unprecedented obstacles, the question becomes: could the air cargo industry secure a larger slice of key markets by leveraging its position as a reliable alternative choice to maritime, in a time of significant uncertainty for both shippers and consumers?

Surprising growth

Ocean and air freight analytics platform Xeneta reported global air cargo demand grew by 12% for the first seven months of 2024. The platform admitted this was ahead of their expectations, having forecasted a growth of just 1% to 2% in October 2023. Rising e-commerce demand from Asia, the Red Sea crisis, and a broader general cargo demand increase driven by semiconductors for high-performance computing were posited as factors for the higher-than-expected figure.

Stéphane Parrenin, manager for international freight and logistics at the International Forwarders & Customs Brokers Association of Australia (IFCBAA), spoke to DCN about movements and trends emerging within the sector both abroad and down under.

“The air freight market is significantly influenced by the sustained growth in e-commerce and demand for high-value, time-sensitive goods such as electronics, pharmaceuticals, and medical supplies,” Mr Parrenin said.

“Major players are focusing on specialised freight services to meet these demands, especially in Asia, North America and Europe, where e-commerce remains robust.”

Mr Parrenin asserts the close relationship between air and ocean freight industries continues to be significant, with air freight reaping the benefits of major sea freight disruption.

“The ongoing Red Sea conflict, ports strikes or the threat of, reshuffling of shipping line networks, or weather events have all contributed to prompting shippers to look for alternatives, have a backup plan and convert selected shipments to air freight, when feasible,” Mr Parrenin said.

Appetite for digitalisation

Mr Parrenin believes the air cargo sector has a serious appetite for digitalisation, which he says undisputedly brings efficiency, increases speed, removes errors and reduces costs. Innovations like artificial intelligence and internet of things are gradually being introduced to the industry, enhancing everything from route optimisation and fuel efficiency to cargo tracking and automated warehouse management.

“Digital platforms enable better forecasting and demand planning, which is crucial given the unpredictability of global trade patterns,” Mr Parrenin commented.

“As technologies continue to develop, they are likely to reduce costs and improve the reliability of air freight services, making them more competitive.”

On the sector’s medium- to long-term outlook, Mr Parrenin believes Australia is set to follow the global trend, although with nuances that reflect both global factors and unique domestic conditions.

“Sydney and Melbourne face capacity constraints. As air freight demand grows, limited airport infrastructure creates bottlenecks, impacting efficiency. Melbourne and Western Sydney Airport expansions will alleviate these issues over time,” he said.

“Skill shortage remains a big challenge, as many have left the industry following the pandemic. Lots of initiatives are currently helping to promote the industry to the general public and attract young people.”

Digital platforms enable better forecasting and demand planning, which is crucial given the unpredictability of global trade patterns.

Stéphane Parrenin, IFCBAA

In terms of the IFCBAA’s recent work, Mr Parrenin said the association’s focus is to continue to be relevant and engaged with its members, addressing the challenges that impact their business through lobbying, advocacy activities, events, round table discussions, as well as initiatives and workshops aimed at keeping the industry healthy, competitive and sustainable.

“Training is high on our agenda. We are consistently reviewing our training portfolio to ensure the content we deliver continues to bring value to the participants,” Mr Parrenin said.

“On the events front, we have held a series of Trade & Logistics Forums in all main state capitals which have been well attended, with speakers presenting on various industry topics and delivering informative content.”

When the wheels touch ground

The proposal of a second Sydney airport existed as an idea for decades before it was eventually understood as a necessity, with Sydney Kingsford Smith Airport expected to hit capacity by the year 2030, the result of the city’s rapidly growing population.

Now close to the finish line and in good time for this projection, Western Sydney Airport (WSI) is scheduled to open its gates in 2026 and supplement passenger capacity for Australia’s largest city. However, beyond a major boost in passenger capacity, WSI is touted to become a vital freight hub, expected to increase Sydney’s air cargo capacity by approximately a third on day one of operations. On opening, WSI’s Cargo Precinct will be able to handle 220,000 tonnes of freight a year, with plans to expand capacity to see the precinct handle up to 1.8 million tonnes of freight annually.

Speaking to DCN, WSI CEO Simon Hickey said he expects WSI’s Cargo Precinct will become the centre of air freight for the region and support national and global supply chains.

“It is expected to support up to 2000 jobs during construction and more than 19,000 direct and indirect jobs across the precinct and connected supply chains, upon opening, each year,” Mr Hickey said.

On the progress of WSI overall, Mr Hickey detailed, “The airport build is more than 85% complete, and we’ve achieved several major milestones in 2024. Our Business Precinct is under construction and is expected to generate 400 jobs through construction with another 2000 permanent jobs anticipated once the business precinct is fully occupied and operational.”

In August, WSI announced it had secured Singapore Airlines as its first international carrier, which Mr Hickey said “put our airport on the map”.

On the upcoming airport’s placement regarding current economic trends in the air freight sector, “Securing Australia’s largest air freight services business in Qantas Freight sends a major market signal of the strength of the opportunity at WSI.”

The big issue that every single airline is facing, is the lack of availability of sustainable aviation fuel.

Brendan Sullivan, International Air Transport Association

Mr Hickey also highlighted airport services partner Menzies Aviation as a significant addition to WSI’s Cargo Precinct, underscoring the company’s current handling of more than two million tonnes of cargo globally each year.

With the sector heading towards environmentally conscious initiatives and decarbonisation, Mr Hickey revealed the Cargo Precinct will include many features to align with WSI’s approach to sustainability across the airport’s construction and operations and support its customer’s sustainability targets too.

“For example, WSI is utilising solar panels on both our terminal building and Cargo Precinct to generate electricity, and we also have mechanisms in place to harvest rainwater for recycled uses across the airport precinct,” Mr Hickey said.

“We’ll also be supporting airlines’ transition to net zero, with the capability of delivering sustainable aviation fuel to aircraft from day one of operations.”

Commenting on the airport’s intention to pursue innovative features, Mr Hickey said, “This is where WSI’s greenfield status really comes to the fore as we’re not having to retrofit aging infrastructure; rather, our team and our customers can put their best foot forward from day one.”

“We consulted with industry and cargo operators on the design and layout of our Cargo Precinct and terminal facilities to support their plans for sophisticated handling equipment to ensure efficient operations for all our tenants.”

It is also understood that WSI will be the first airport in Australia without a traditional air traffic control tower and will instead operate a digital aerodrome service (DAS). DAS reportedly provides more information and greater situational awareness to air traffic controllers via more than 20 high-resolution cameras monitoring the airport and immediate airspace that will beam real-time vision to a DAS centre at Eastern Creek in Western Sydney.

An industry view

The International Air Transport Association (IATA) represents a reported 330 airlines globally, comprising some 80% of global air traffic. The association’s global head of cargo, Brendan Sullivan, spoke to DCN about trends and outlook for air cargo globally. As industry now waits to see what effects recent geopolitical tensions, social unrest, and a US election will have on the sector, Mr Sullivan admits there are uncertainties.

“There’s a fair amount of tailwind still, but there are some headwinds, and there’s a little bit of uncertainty as to how things play out in the geopolitical and political sectors,” he said.

Securing Australia’s largest air freight services business in Qantas Freight sends a major market signal of the strength of the opportunity at WSI.

Simon Hickey, Western Sydney Airport

Specifically on Donald Trump’s election victory and how this might affect trade globally, such as through tariffs, Mr Sullivan said, “Our economics team is obviously following it very, very closely.

“What we have seen already is supply chains adapting to what may come – kind of taking an approach where [supply chains] think there may be restrictions; they’re advancing some of those items that they want to get into the country.

“But a little bit longer term, we’re going to need to see how that trade policy evolves, what can go in, and how quickly it can be made if there are changes.”

On the subject of sustainability, Mr Sullivan said that despite the whole air cargo industry being committed to decarbonisation, “the big issue that every single airline is facing, is the lack of availability of sustainable aviation fuel”.

“The production really needs to come up to be able to meet the demand, because the aviation sector, including air cargo, has been using every single drop of it and is ready to use more,” Mr Sullivan affirmed.

“So, in terms of [whether they are] doing enough, there’s more to be done no doubt, but there is definitely some serious commitment out there in the industry to make sure that we get there.”

Emirates returns

In October, Emirates relaunched its daily service between Adelaide and Dubai, enhancing trade links between South Australia and key global markets, while also bringing added capacity and more direct export options for local goods.

Each daily flight will offer 14 tonnes of cargo space, totalling 196 tonnes weekly between Dubai and Adelaide, with key anticipated exports ranging from seafood, meat products and fruits and vegetables, to general cargo consisting of pharmaceuticals, machinery parts, retail garments and electronics. The value of freight exports is estimated by the South Australian Tourism Commission to be worth $98 million per year.

Greg Johnson, cargo management Australia at Emirates SkyCargo commented, “While economic conditions are challenging in some sectors, the outlook for Australian air freight is positive, especially with the ongoing recovery in trade and tourism.”

On challenges unique to operating in Australia, Mr Johnson shared, “Australia’s geographic remoteness poses logistical challenges, especially for time-sensitive and temperature-sensitive shipments. The vast distances between major cities also require unique domestic solutions.

“With the frequency of Emirates flights across the vast global network of over 140 destinations worldwide, coupled with the tailored, highly-specialist product portfolio, Emirates SkyCargo is able to serve its customers to and from Australia with the high level of service the airline is renowned for.”

In terms of the company’s current environmental initiatives, Mr Johnson revealed, “Emirates is also a global leader in the fight against illegal wildlife trafficking and exploitation, with the aim to protect the beauty and biodiversity of the natural world.

“At Emirates SkyCargo, we have a longstanding, zero-tolerance policy on illegal wildlife trade and a complete ban on hunting trophies for the Big Four.”

Mr Johnson said wildlife awareness training had also been extended to staff in Emirates’ passenger services, Emirates Airport Services, and the Emirates Group Security team, to help stop illegal wildlife trafficking in its tracks.

This article appeared in the December 2024 | January 2025 edition of DCN Magazine