Top 5 airfreight trends to expect for 2019

Happy new year! Every January brings with it anticipation of the months to come and what they hold for airfreight logistics. Trade wars, recent WorldACD reports and the impending finale of Brexit have instilled uncertainty into the market, but the outlook for this year still suggests growth. We at Air Cargo World , have chosen the top five airfreight trends we expect we will hear about the most in 2019. On the following pages, check out the roundup of some of the top trends we predict. Did we miss some? Let us know! #5: Cross-border e-commerce boom continues This year, both China’s 11.11 and the Western seasonal shopping holidays broke peak-season records, raking in US$30.8 billion and US$24.2 billion in sales, respectively. To serve e-commerce operations, Alibaba’s logistics subsidiary, Cainiao, unveiled its investment to develop six “eHubs,” while Amazon has continued building up its own Amazon Air hub network. Airfreight hubs are becoming increasingly important to e-commerce growth, as e-commerce giants, integrators and carriers are building up their package sorting and automation capabilities , along with extending networks in the hopes to capture a larger portion of the growing demand. We expect those trends to continue and accelerate in 2019. #4: The rise of Southeast Asia Southeast Asian airports are among the fastest growing in the world, with production of various goods shifting into the region, due to rising costs of manufacturing in China, and concerns related to volatile trade relations between the United States and China. The Association of Southeast Asian Nations’ (ASEAN) economic ministers also signed an agreement to support the facilitation of cross-border e-commerce between ASEAN members in November 2018. Turkish Cargo is increasing its presence in the region with the launch of new freighter services. Meanwhile, airports in the surrounding region – including Incheon (ICN), Singapore Changi (SIN), Hong Kong International (HKG), and Taiwan Taoyuan (TPE) – are helping national carriers expand air rights with ASEAN countries, and encouraging operators to increase flights south, some providing special incentive programs to attract more flights. “This will definitely reduce our original cargo export to China, even though it may increase some transfer cargo traffic in Taiwan from ASEAN,” said Jimmy Liu, senior manager of cargo operations at TPE. Executives from logistics companies, including APEX Logistics and SEKO Logistics, agree that Southeast Asia is a rising hotspot, but warn the industry to approach with caution, saying that they are concerned about the bandwidth the region can provide for freighter operations if the countries do not sufficiently develop their infrastructure and policies. #3: Cool-chain tech advances support burgeoning pharma demand Industry participants are making necessary strides forward in cool-chain technology to keep pace with the fast-growing market demand for pharmaceuticals. The new innovations in cool chain-tech developed in 2018 will likely be put to use in the new year as operators increase their investments in storage , certification and cooperation. By 2020, IATA predicts biopharma cold-chain logistics spending will increase by 8 to 9 percent, and that biopharma sales will increase by 4 to 5 percent. Europe and North America maintain the top biopharma market share at 60 percent, although cold-chain logistics spending is expected to grow fastest in Asia and North America. Rising demand is expected in the coming year from Asia, due to the region’s expanding middle class in developing countries and aging population in developed countries. #2: Continued market uncertainty With regulatory changes on the horizon coming from a fast-approaching Brexit finale and the continued trade war between the United States and China, market uncertainty will challenge industry stakeholders’ operations into the new year. As the March 29, 2019, deadline for Brexit draws near, no clear guidance or clues have been given as to how rules and regulations will play out. Aviation industry organizations are fiercely advocating for the United Kingdom and the European Union to hammer out an agreement. In the meantime, logistics companies warned carriers to prepare for potentially higher costs and process complexity, which may exacerbate already-existing strains on trade flows or have ripple effects throughout the greater European region. Some logistics companies have booked standby aircraft or are forward-stocking goods to mitigate against losses should negotiations result in a “no deal” outcome. Moving east, the series of trade tensions ratcheted up between the U.S and China, and accentuated by a U.S. exit from the Universal Postal Union in October, have done little to reassure the air cargo industry against possible collateral damage. Despite operators reporting minimal impact to cargo numbers this peak season, as covered by our sister publication, Cargo Facts , industry experts expect continued market uncertainty into the new year and are warning stakeholders to form contingency plans. #1: Increased automation and digitalization While the conventional narrative states that the airfreight industry is reluctant to adopt digital innovations, developments this year suggest the times may be changing, with executives from logistics providers, such as SEKO Logistics’ global vice president of airfreight, Shawn Richard, saying it is increasingly necessary to implement these changes. The cargo industry has made strides in the last year towards increasing its automated and digitalized processes and is expected to continue doing so in the coming year. Various airlines have begun to cut out traditional paper-based systems by implementing use of digital processes, including digital devices that measure ULDs, apps for dangerous goods declarations and online platforms for booking and tracking shipments in real-time. Forwarders, integrators and airports are also investing in technology. Increasingly, airports require ground handlers and providers to reserve slots via digital platform, thus increasing efficiency and lowering costs and carbon footprints through visibility and data-sharing. At the end of 2018, IATA also announced that the electronic airwaybill (e-AWB) will become the default contract of carriage for all air cargo shipments on enabled trade lanes, effective Jan. 1, 2019, which received mixed reactions from our sources – some optimistic at the news, and others expressing their reservations. Either way, in the coming year, we expect to see more digital cooperation between various logistics chain partners, some through private agreements, and perhaps more as part of air cargo communities.

Top 5 airfreight trends to expect for 2019

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