03 Apr Changing dynamics of the air cargo industry and realizing the growth potential
Air cargo is one of the most dynamic industries in the world, and the growth prospects have been enormous so far. Even during the peak pandemic times, the industry facilitated the rapid distribution of COVID-19 vaccines worldwide. Despite the slump and sluggishness in recent times, the industry still continues to grow at a rapid pace.
Certain factors are pushing the air cargo industry to achieve its true growth potential. However, due to a lack of right support, the industry often falls back and finds it challenging to achieve its true potential. While digitization is seen as a way ahead, it is imperative to understand the impact of overall digitization on specific processes.
Driving forces behind air cargo’s growth potential
Air cargo consisted of high-value time-sensitive items; interestingly, e-commerce had a significant impact. Data global air cargo data revealed an interesting picture. Global demand, measured in cargo tonne-kilometres, fell by 9.7 per cent in July 2022 compared to the year-ago period.
IATA says that capacity was 3.6 per cent in July 2022, which is above the previous year, but still 7.8 per cent below July 2019 levels. Growth prediction, the association is cautious due to the range of issues influencing market behaviour; the near and medium-term challenges posed by a host of macroeconomic and geopolitical issues may offset bullish air freight demand.
With various airlines’ untapped and timely resource crunch, the e-commerce boom has suffered for a long time, leading to other modal players venturing into the air cargo business. Due to inconsistent or no proper policy push from airlines for multi-modal business directed to other entities capturing this space.
Focusing on the current emerging country like India, where the world is looking at the phenomenal growth in infrastructure and logistics, including all air, sea, road, and rail modes being improved, there is an astronomical surge in demand.
Global players like Maersk, Prologis, Mirae Asset, Alta Capital, and Panattoni are investing in such opportunities, improving the economies at various levels, and making the maritime logistics market glow like a supernova.
Cargo community system to leverage the potential
Being considered the most premium mode of cargo transportation, the airport has to focus on providing more services to its stakeholders to create customer delight. With global vision moving towards ‘greener’ approaches, adapting to digital innovations and paperless’ initiatives have become imperative, thereby supporting sustainability. Technology is becoming the driving force for airports to meet most of these initiatives.
The essential parameters to consider by an airport operator while implementing a cargo community system:
- Near zero to no paper in their handling and promote other stakeholders to follow in their processes.
- Moving from cash, cheque to digital options to collect, pay, and transact with stakeholders.
- Attract more non-governmental institutions in the logistics supply chain with digital processes which can be integrated and interfaced with government single windows.
- Security agencies to perform tasks by using/interfacing with other stakeholders like agents, GHA, and airlines.
- Support governmental and global regulatory agencies to help the country climb global initiatives such as single window, ease of doing business, IATA initiatives such as e-AWB, e-CSD, e-Corridors between countries, and many more.
Shift towards digitization
With all the emphasis on digitization, the world of air cargo is now embracing digitization to a large extent. Right from the push from IATA to European Union, a lot is happening in terms of implementation. Going forward, in the next couple of years 100 per cent digitization at least on a functional level is foreseen in major geographies. Eventually, this might lead to 100 per cent digital infrastructure in the overall logistics ecosystem provided the industry embraces a smart platform like a cargo community system.