The global air cargo market was valued at 109.1 billion freight tonne - kilometers (FTK) in 2017 and is expected to grow with CAGR 4.3% over the forecast period. The market is anticipated to have a sustainable growth from 2017 to 2025. Air cargo is a concept when transportation of any good or commodity is to be carried out in an aircraft.
The freight segment of the air cargo component type holds a major share of market accounting to more than 65% in 2017. Factors such as increasing development and transactions in the e-commerce and pharmaceutical sectors is favoring the growth of this industry. In addition, with the development of business manufacturing units, which are widening their distribution channels through exports will further escalate the demand for air cargo services worldwide.
The lucrative growth of the infrastructure for cargo hubs across various countries will result in increased air freight. This, in turn, will support the demand for these services and ensures high accessibility to their recipients. The e-commerce segment has transformed the business and is witnessing a significant growth rate of around 20% every year, which is expected to create productive opportunities for this industry.
E-commerce offers various speeds and benefits, it operates via both postal cargo (air mail) and air freight. Quick turnaround time or speedy delivery forms one of the critical components of the e-commerce segment, thereby representing massive opportunities for market growth.
Factors such as consistent developments across information technologies in compliance with the regulations of air cargo business and focus on employee progress through frequent training and targets, and business intelligence services catering to the air transport industry. The executions of the above-mentioned factors pose a positive growth scenario for the market over the forecast period.
As per a white paper published by IATA in September 2017, it elucidates the key aspects of the air transport service industry and focuses on understanding the consumer needs and set up an efficient supply chain.
The businesses set up across the globe are collaborating with the stakeholders, including e-tailers, airlines, customs duties, and ground handlers. Effective collaboration and functioning are the keys to safe and reliable air transportation.
The global air cargo market is projected to exceed 153.0 billion FTK by 2025, with a CAGR of 2.8 % from 2017 to 2025. The market is anticipated to witness growth on account of the successful implementation of favorable policies. For instance, introduction of ‘Open skies’ policy encouraging the liberalization of the rules and regulations prevalent in the aviation industry. This policy has created a concept of a free market environment across several countries thereby maintaining a balance in commercial aviation operations and reduce fuel consumption. Hence, with the changing scenario, it is favoring the consumers to opt for these services worldwide.
Segmentation by Component Type
• Air Freight
• Air Mail
The air freight segment is growing with the CAGR of 3.2% in the year 2017. The market growth is attributed to the several benefits and advantages such as faster shipping methods, high reliability concerning arrival and departure times.
Also, time consumed and insurance premium is economical as compared to other forms of trade, this will further aid in widening the customer base across the globe. Furthermore, these services reduce the risk of theft and goods damage by ensuring a high level of security for each of the transactions.
Segmentation by Service
The express service segment is witnessing an exponential growth with an increase in the expansion of the trade networks. This segment is anticipated to record a CAGR of more than 3.5% over the forecast period. Manufacturers who are dealing with sensitive shipments are opting for express shipping options of air freight. They consider it a valuable option for timely and efficient delivery. The small scale and mid-scale manufacturers are preferring this option as it allows them to trade efficiently in the international market.
Segmentation by Region
• North America
• Asia Pacific
• South Korea
• Central & South America
• Middle East & Africa
APAC is the leading market with 400 billion FTK in the year 2017 with a CAGR of 2.8%. APAC market holds a dominant position and is expected to retain the same throughout the forecast period. E-commerce trade in this region is growing rapidly as a result of major focus to meet the delivery needs of their customers thereby positively influencing the market. The investments in this industry will pose lucrative growth opportunities for market players over the forecast period.
The global air cargo market is consolidated in nature on account of a few players dominating the market. Key players in the market include UPS Airlines FedEx Express, Cathay Pacific Cargo, Korean Air Caro, China Airlines Cargo, Lufthansa Cargo, Cargolux, Singapore Airlines Cargo, and DHL Aviation Emirates, SkyCargo. Market players are introducing new service offerings to lure and widen their customer base.
For instance, DHL express had launched a new service for the health industry mainly in LATAM and the U.S trade. This service is termed as “DHL Medical Express Service” or “WMX”. They are a new alternative for commercial carriers, and this will also address any delay at the Brazilian airport.
Research Support Specialist, USA