Air Cargo Market Report Scope & Overview:

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The Air Cargo Market Size was valued at USD 182.09 Billion in 2023 and is expected to reach USD 268.79 Billion by 2032 and grow at a CAGR of 4.4% over the forecast period 2024-2032.

The Air Cargo Market is an aspect that plays a very significant role in global trade and rapid logistics markets. Increased demand for time-sensitive delivery makes the air cargo services necessary for transport goods over long distances effectively. The world market experienced a sharp increase in 2023 due to sustained growth in e-commerce, cross-border trade, and pharmaceutical needs especially post-COVID-19. There are also policies implemented by the governments to ensure that air cargo operations become more efficient and sustainable. For instance, The UK government has unveiled over USD 133.90 Million of funding to support five research and development projects toward reducing the aviation impacts on the environment. As announced by the Department for Business and Trade, the funding was going to be delivered through the Aerospace Technology Institute Programme in a move to pioneer groundbreaking new techs such as zero-emission hydrogen flight and sustainable propulsion systems.

Some of the policies are expressed in the FAA Reauthorization Act by USA, which encourages the employment of technology and green solution aspects such as the promotion of electric aircraft and fuel-efficient planes. Other trade agreements, such as the United States-Mexico-Canada Agreement, which concerns only agricultural, pharmaceutical, and manufactured products, also attract air cargo demand.

The most recent innovations involve the automation of air cargo handling systems to imlprove the process of sorting, loading, and tracking. Companies are embracing drones and unmanned aerial vehicles (UAVs) for smaller deliveries and last-mile logistics. Digitization efforts, for instance, the integration of blockchain for better tracking and tracing, enhanced security, and improved transparency, is revolutionizing the air cargo landscape.

Air cargo sector holds vast opportunities in the future. Electronic Air Waybills (eAWB) is likely to increase, and Sustainable Aviation Fuel (SAF) investment will enhance the operational efficiency of air cargo while reducing carbon emissions. Demand for air cargo service in the U.S. will be robust on the grounds of expedited deliveries, an increasing e-commerce industry, and healthcare requirements. In addition, the growing economies of Asia Pacific countries, especially China and India, besides other emerging economies, are expected to lead to high growth in the air cargo industry. International trade development and advancement in logistical technologies coupled with it will provide a steep increase in the air cargo market between 2024 and 2032.

Air Cargo Market Dynamics

KEY DRIVERS:  

• E-commerce developments and its expansion both domestically and internationally have resulted in growth of air cargo market.

The same-day or next-day delivery services provided by the online retailers such as Amazon and Alibaba among others demand fast and reliable logistics. Air cargo is the lifeblood of this supply chain because it facilitates the transportation of time-sensitive and high-value goods, including electronic apparatuses, fashion products, and consumers' goods. Air freight has to remain an important source of replenishment of inventories and replenishment for online businesses because it feeds demand from customers in various markets. Cross-border e-commerce has also seen the rise of using air cargo, which can reach retailers to markets outside the country within several hours or days. These trends are likely to continue with this ever-growing international online retail industry.

• Pharmaceutical and related healthcare industries require safe, quick logistics services.

Another reason the air cargo market has been booming recently is the desire by pharmacy and healthcare industries for fast, temperature-controlled deliveries. Many pharmaceutical products - vaccines, medicines, diagnostic kits, among others - have stringent handling and storage conditions, often involving precise temperature control and fast delivery periods. Temperature-controlled compartments, advanced monitoring technologies, and other features of air cargo solutions ensure safe delivery of these products without compromise. The COVID-19 pandemic placed unprecedented pressure on worldwide air cargo systems due to the transport of vaccines and medical supplies. This demand is likely to continue because the healthcare industry continues to introduce new treatments and therapies that require rapid, efficient transportation, especially in remote and underserved areas.

RESTRAINT:

• High fuel costs are affecting air cargo companies' operational costs.

The market has one major constraint: the often high and ever-fluctuating price of fuel. Fuel is typically the biggest operating cost for most air cargo carriers and accounts for a quarter of all expenditure. Higher fuel prices push up these costs to an unsustainable level, meaning higher freight charges for the customer. This can further strain the profitability of air cargo operators driven by volatility in oil prices with interplay from geopolitics, supply-demand imbalances, and natural disasters. Companies can try to impose fuel surcharges but this may reduce demand from price-sensitive customers. It is equally challenging because adopting more sustainable practices would require long-term investments in fuel-efficient aircraft or the adoption of SAF, both of which require heavy, upfront investment. This further presents a challenge to managing the costs of fuel while not displacing efficiency in servicing.

Air Cargo Market Segmentation Overview

BY TYPE

The Air Cargo Market can be broadly bifurcated into two major business segments, namely Air Freight and Air Mail. In 2023, Air Freight captured the highest market share of 61.59%. The remaining market share is mainly due to the steady increase in the demand for the shipment of high-value and time-sensitive goods across borders such as between nations in electronics, pharmaceuticals, and e-commerce sectors. Air Freight offers the speed, security, and efficiency which these industries require to be shipped fast with the entire world; it is the most preferred method of shipping urgent and valuable cargo for its speed. Furthermore, improvement in automated cargo handling systems and tracking technologies have made the air freight service more efficient and transparent.

Air Mail is likely to grow the fastest in the forecasts, reaching a CAGR of 5.0% during 2024-2032. Growth in Air Mail can be attributed to an increase in volume of packages and documents shifted through e-commerce deliveries and cross border trade. The increase in demand in e-commerce has resulted in a higher demand for postal services which guarantee fast delivery, and this increased demand for air mail service. Further growth of Air Mail is expected to increase with the expansion of international trade, especially in growing markets where access to rapid and reliable logistics services is becoming more important.

BY DESTINATION

The Air Cargo Market can be further divided into Domestic and International segments. In the year 2023, International Air Cargo was the market share holder as well, and it accounted for nearly 56.12% market share. International air cargo services are crucial for ensuring transportation across different countries and continents, especially for high-value goods such as electronics, automotive parts, and pharmaceuticals. International air cargo services have increased greatly due to the growth of e-commerce and the improvement of international trade agreements. E-commerce across borders has also highly increased in demand for speed, reliability, and assurance for international shipment.

Air cargo rates on the transpacific trade picked up in August 2024 as busy market conditions continued and companies begin to eye what is expected to be a strong peak season. Newest figures from the Baltic Exchange Airfreight Index (BAI) calculated by TAC Index indicate rates from Hong Kong to North America leaped up to USD 5.96 per kg in August versus USD 5.72 per kg a month ago and stand 22.9% higher than the same month last year. Prices on the trade continued to climb with the passage of the month, and by end of August had surpassed USD 6 per kg.

Though International Air Cargo remains the biggest market, Domestic is forecasted to grow the fastest, with a CAGR of 5.1% from 2024 through 2032. The reason behind it would be a rapid increase in demand for fast domestic delivery services, which is especially crucial for large countries, such as the U.S., China, and India, due to the long distances involved, making air cargo a more efficient way to deliver fast to these large regions. Latest trends of same-day and next-day delivery services through e-commerce websites have fueled the demand for domestic air cargo services to a higher extent.

Air Cargo Market Regional Analysis

Asia Pacific dominated the 2023 market share with 37.64%. This position was because of rapid industrialization, the booming e-commerce sector, and highly efficient manufacturing in the country. The Asia Pacific region is another global manufacturing hub, especially for electronics, automobiles, and consumer goods. Strong demand from this sector drives a lot of the air cargo business. As cross-border trade within the region continues to grow and exports to Europe and North America increase, the continent's position as a market leader in air cargo has been strengthened.

During the forecast period, 2024-2032, North America is expected to be the second biggest region. The U.S is a global trading giant with a very effective air cargo network within domestic and international markets. Through developments in e-commerce, along with the increased demand for fast and secure transport of high-value goods such as pharmaceuticals and electronics, the region's air cargo market will still keep on thriving in the coming years.

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Key Players in Air Cargo Market

Some of the major players in the Air Cargo Market are:

• DHL Aviation (Express shipping, Freight forwarding)

• FedEx Express (Express delivery, Logistics solutions)

• UPS Airlines (Parcel services, Air freight)

• Cathay Pacific Cargo (Freight services, Air charter solutions)

• Singapore Airlines Cargo (Freight forwarding, Temperature-controlled cargo)

• Emirates SkyCargo (Pharmaceutical cargo, Freight forwarding)

• Lufthansa Cargo (Logistics services, E-commerce solutions)

• Korean Air Cargo (Perishable cargo, Air freight)

• Cargolux Airlines (Outsize cargo, Specialized logistics)

• Qatar Airways Cargo (Freight services, Pharmaceutical logistics)

• ANA Cargo (Express cargo, Freight forwarding)

• Etihad Cargo (Temperature-controlled cargo, E-commerce solutions)

• China Airlines Cargo (Freight forwarding, Special cargo handling)

• Turkish Cargo (Freight services, Pharmaceutical logistics)

• Asiana Cargo (Freight forwarding, Air mail services)

• AirBridgeCargo Airlines (Heavy cargo, Temperature-sensitive logistics)

• Atlas Air Worldwide (ACMI leasing, Freight forwarding)

• Kalitta Air (Charter services, Cargo logistics)

• Polar Air Cargo (E-commerce solutions, Air freight)

• Amerijet International (Freight services, Specialized logistics)

RECENT DEVELOPMENTS:

• September 2024: Australia is the third country in the US and Canada to announce more stringent security procedures for cargo originating from countries in Europe and CIS. From September 26, the country will require cargo traveling on passenger aircraft entering into the country to only be tendered from a shipper with which the forwarder has an Established Business Relationship or EBR. The Special Security Direction was published by the Department of Home Affairs and covers in its entirety 55 countries.

• July 2024: DHL Express has signed a Letter of Intent to enter into an Operating Agreement with Central Airlines (HLF / I9) to deploy two DHL B777 freighters. It will be the first time for DHL Express to so do with a local Chinese cargo airline.

• July 2024: UPS has agreed to purchase the Mexican express delivery company Estafeta, including a fleet of six aircraft. The deal was unveiled when Mexico began to represent strategically and became the strategic country for UPS in importance, while the adoption of nearshoring grew.