Emerging trends in air cargo

In this column for Air Cargo News, Neil Bulfield, head of airfreight at DG International, reflects on the current state and projected future of the airfreight industry, revealing several critical trends and challenges for 2024.

The evolution of e-commerce

While e-commerce is still a relatively new phenomenon, it’s now not only a major factor in the market but is set to be the biggest driver of growth in 2024 and beyond. This comes in what will likely be an otherwise flat year for growth across the supply chain industry.

Boosted by the pandemic, online shopping has become a new normal for consumers, who now expect their orders to arrive within 24 hours.

While the boom in demand for consumer goods that accompanied the lockdown has subsided, that expectation of next-day delivery remains, making the airfreight industry absolutely vital to a smooth-running e-commerce market.

In 2023, we saw demand lessen as the cost of living crisis gripped the country.

However, as consumers search for reduced prices, annual sales events such as Black Friday have exploded in popularity.

Instead of a one-day event, Black Friday has become a month-long peak, with bigger discounts and more choices.

Therefore, it’ll be critical for air cargo companies to plan ahead for extended peak periods.

To manage airspace during peak seasons, businesses should maintain ongoing communication with clients and e-commerce partners to ensure the most accurate forecasting possible.

This involves implementing block space agreements and capacity agreements with strategic airline partners while maintaining close communication with them to ensure that capacity is maintained as needed.

Diversifying into new markets

A decrease in demand, coupled with an oversupply of capacity, has meant that airfreight businesses have little room to manoeuvre when it comes to pricing.

In order to stay on top, companies will have to get creative in 2024. Rather than standing still and riding out the storm, airfreight businesses will be looking for ways to diversify into specialised markets which are less competitive.

Despite a drop in food exports from the UK post-Brexit, British food exports continue to grow globally, particularly into Asia and the Middle East, not only for expat communities but also to local markets where UK-produced food products are held in high regard.

Due to the nature of these products – short shelf life, variable temperatures in different nations, and customs and regulatory requirements – it is critical that service providers have the tools in place to meet their customers’ needs.

Embracing innovation

While margins are tighter, finding ways to boost efficiency across air cargo businesses will be essential to maintain relationships with customers and expand revenue streams.

Companies will be looking for ways to invest in new partnerships, technology and infrastructure which will streamline day-to-day operations and improve customer service.

It is important to invest in systems which provide customers with transparent data and supply chain visibility from the retailer to the final mile.

This should include tracking, vessel details, financial reporting, shipment approvals, and invoicing, allowing customers to access information quickly, and reducing the volume of enquiries.

In conclusion, the airfreight industry will have to navigate a landscape shaped by an unpredictable economy and shifting levels of demand.

The evolution of e-commerce, characterised by heightened expectations for rapid delivery and extended peak periods, will mean the fast-moving air cargo industry is more important than ever.

Looking ahead, the industry’s resilience hinges on its ability to adapt swiftly, harness innovation, and forge strategic alliances.

Airfreight businesses that prioritise agility, technological advancement, and customer-centric solutions will not only navigate the current challenges but also carve a path toward sustained growth and success.