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The weekly newspaper for air cargo professionals No. 1,210
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12 December 2022
Air France-KLM CO2 emissions reduction targets ...
DSV BECOMES FIRST ETIHAD CARGO PARTNER TO PURCHASE SAF TO OFFSET CARBON EMISSIONS
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INSIDE
LIEGE AIRPORT WELCOMES MSC...
MSC has created an air cargo airline as a complementary service to their ocean container shipping solutions. MSC Air Cargo will use Liege ... PAGE 2
NEW KUEHNE+NAGEL AIRSIDE ...
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tihad Cargo has announced that DSV Global Transport and Logistics has become the carrier’s first partner to purchase sustainable aviation fuel (SAF) to offset the carbon emissions of its cargo shipment. Via the book and claim system, Etihad Cargo facilitated DSV’s SAF purchase, enabling the transport and logistics provider to offset CO2 emissions and reduce non-CO2 climate impact. Etihad Cargo transported DSV’s cargo shipment from Washington Dulles to Abu Dhabi on Etihad’s first transatlantic NetZero flight on 13 November. Etihad’s Boeing 787 “Greenliner” combined SAF with contrail prevention technology from its partner, SATAVIA, to actively manage carbon emissions and non-CO2 climate effects from contrails, or condensation trails, which cause surface warming and are responsible for up to two-thirds of aviation’s climate impact. “Etihad was recently named the Environmental Airline of the Year, and Etihad Cargo is committed to providing solutions that enable its partners and customers to achieve their sustainability
KUEHNE+NAGEL has entered into a long-term agreement for a new airside facility located in the airport zone of OR TAMBO ... ambitions. Etihad Cargo is witnessing more focus on sustainable air cargo from customers who are seeking to establish partnerships that provide SAF utilisation, carbon offset initiatives and management of non-CO2 climate impact. Etihad Cargo’s partnership with DSV to transport cargo utilising the SAF book and claim system has showcased the power of collaboration and demonstrated the future of net-zero aviation. The successful delivery of DSV’s shipment has proved net-zero air cargo operations are possible and is the first step in transforming the possible into the routine,” Martin Drew, Senior Vice President – Global Sales & Cargo at Etihad Aviation Group, said. Offering partners and customers the option to transport cargo more sustainably via the SAF book and claim system is the latest step in Etihad Cargo’s sustainability journey. In alignment with Abu Dhabi Environment Vision and Etihad Aviation Group’s sustainability strategy, Etihad Cargo has pledged to achieve net zero carbon emissions by 2050. The carrier is targeting a 20 per cent reduction in emissions intensity by 2025
and aims to cut 2019 net emissions by 50 per cent by 2035. Demonstrating the carrier’s commitment to achieving sustainability through partnerships, Etihad Cargo became the first Middle Eastern carrier to join TIACA’s BlueSky verification programme, enabling the carrier to assess its progress against eight critical sustainability criteria via an evidence-based desktop verification process. Etihad Cargo also recently announced a partnership with IATA to trial a cargo-specific CO2 emission calculation tool, which will provide a valuable proof of concept for the cargo component of the IATA CO2 Connect carbon calculator. During the three-month trial, Etihad Cargo will share data on fuel burn, load factors and other key variables from flights and cargo shipments and advise on various use cases. IATA and Etihad Cargo will use the world’s first cargo-dedicated CO2 emissions calculation tool to manage and report on sustainability progress to provide the entire value chain, including shippers, forwarders, investors and regulators, with reliable and trustworthy data.
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BOEING FORECASTS AIR CARGO...
THE tumultuous effects of the pandemic in the last two years have upended expectations and caused challenges for longterm ... PAGES 4-5
TRENDS AND CHALLENGES...
HAS been challenging for many industries around the globe, and the air cargo market has been no exception. With ongoing external ... PAGES 6-7
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Liege Airport welcomes MSC Air Cargo
MSC has created an air cargo airline as a complementary service to their ocean container shipping solutions. MSC Air Cargo (MAC) will use Liege Airport as its European hub, having started its operations with a first landing on 3rd December, 2022. Following the delivery of the first of four MAC-branded Boeing 777-200F aircraft that will be operated by Atlas Air. MSC Air Cargo’s first Boeing 777-200F will start with four rotations per week via Liege Airport. It will operate regular services connecting both Mexico City and US airport Indianapolis with Liege. Additionally, round-the-world services will be operated via Liege. These routes will be dedicated to pharmaceutical products, perishable goods and high-value cargo. Handling services at LGG will be provided by Challenge Handling.
The next three aircrafts will be delivered during 2023 and a further increase of weekly MAC freighter calls in LGG is expected. It’s also good news for the environment because these aircrafts consume less fuel and make less noise. “We are really proud to be hosting a worldrenowned group such as MSC. We look forward to supporting MSC as it develops its airfreight business and further enhances its position as a global leader in transportation and logistics. The selection of Liege Airport shows once again not only that it has a prominent place in the world of cargo but also and above all that it is playing an important role in a multimodal vision of logistics. We are delighted to welcome MSC Air Cargo to Liège and to be vital partners in their projects,” Laurent Jossart, CEO of Liege Airport, said.
Avianca Cargo launches three new shipment services LATIN American carrier Avianca Cargo has announced a renewed product portfolio and the launch of three new shipment speed service levels: Priority, Standard, and Standby. These new shipment services intend to offer a tailormade and flexible service to cargo customers. “In Avianca Cargo, we continue transforming our business focused on improving our customer’s experience. We want to offer our clients different solutions for them to fly their cargo as needed,” Leonel Ortiz, Development Cargo Director for Avianca Cargo, said. The development of the speed level allows customers to choose the best fit according to their needs. Priority guarantees the shipments
on booked flights, ideal for urgent shipments of products such as pharma, perishables, valuables, human remains, and live animals. Standard is a balance between urgency and cost, perfect for the day-to-day shipment of products. Finally, Standby is a cost-effective solution designed for general cargo with flexible delivery times. CEIV’s certifications, the recent integration with three of the most important marketplaces of the industry, this new product portfolio, and new shipment services contribute to the transformation plan of Avianca Cargo to offer a robust service to its customers and to continue its position as a leading carrier in the region.
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New Kuehne+Nagel airside facility boosts Africa’s healthcare logistics capability KUEHNE+NAGEL has entered into a longterm agreement for a new airside facility located in the airport zone of OR Tambo International Airport, Johannesburg, South Africa. As part of this agreement, Kuehne+Nagel offers customers a set of logistics solutions. Core to this offering is a comprehensive
their strategic growth plans for Africa, Kuehne+Nagel’s new facility is designed with healthcare and pharmaceuticals in mind. “Pharmaceuticals in particular are highlysensitive, time-critical products,” Gereon Niemeier, Managing Director, Kuehne+Nagel South Africa, said. “Every minute these products spend on the tarmac exposes
cold chain solution, ensuring around-theclock temperature-control to safeguard the integrity of highly sensitive pharma products. The new offering is pivotal to supporting Africa’s aim to become more self-reliant in healthcare operations. South Africa, Nigeria, and Algeria are leading the manufacturing charge in sub-Saharan Africa, while imports from Europe, North America, India and China remain crucial to meeting Africa’s demand for medicines and basic healthcare. To support its healthcare customers in executing
them to temperature fluctuations, physical damage, and loss. Our new facility addresses all these challenges to ensure product stability throughout the journey.” “Our people have the expertise for planeside access that other logistics providers don’t,” Niemeier added. “In addition, the facility is so close to the charter parking area that we can provide in-person visibility resources, as well as a unique dollie solution, that greatly reduce the risk of ground handling errors as well as shipment claims.”
China Southern Air Logistics joins WebCargo to become first Chinese carrier to offer China import eBookings CHINA Southern Air Logistics is partnering with WebCargo to offer forwarders real-time rates, capacity, and eBookings. Shipments originating in China represent one of the largest segments of global air cargo trade, accounting for 7.3 million metric tonnes of a global 65.7 million metric tonnes. Forwarders around the world, including the 3,500 freight forwarders in over 10,000 offices that already use WebCargo, will gain direct access to China Southern’s leading coverage into this region. “Digital transformation has become key to staying ahead. We are happy to embrace e-solutions to optimise our sales, and believe our cooperation with WebCargo will bring considerable added value to our customers,”
Chengqing Tao, Executive Vice President of China Southern Air Logistics, stated. “eBookings are already transforming air cargo in many parts of the world, and now also in the key market of China. Allowing freight forwarders direct access to China import bookings is critical for global supply chain reliability and access,” Zvi Schreiber, CEO of the Freightos Group, said. “We’re privileged to partner with a leading Chinese carrier, China Southern Air Logistics, to bring new-found efficiency to freight forwarders globally. In just four years, Digital Air Cargo, or DAC, has gone from zero, to airlines with more than 50% of worldwide capacity available electronically on WebCargo.”
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CharterSync manages first cargo flights at Teesside International Airport CHARTERSYNC has managed the very first ad hoc flights into the new cargo facility at Teesside International Airport, which is set to play a vital role in powering trade in the north of England following the closure of Doncaster Sheffield Airport earlier this year. CharterSync worked closely with Teesside Airport to manage two time-critical flights – carrying cargo for a major motor manufacturer – with just three hours’ notice. The ability to respond to urgent flight requests at the new Teesside facility has been developed over some months, with CharterSync working closely with the airport to ensure preparedness for ad hoc cargo flights. This collaboration will boost the UK’s northeast trade lane, ensuring greater regional connectivity at a time when the closure of Doncaster Sheffield Airport means approximately 10,000 tonnes of freight that was handled there annually will
need to be flown elsewhere. “Teesside International Airport will play a crucial role in improving cargo infrastructure in the UK, particularly in the ad hoc and timecritical charter sectors. CharterSync will be fully supporting the activation and development of this new cargo hub, which has already demonstrated its impressive agility when it comes to providing the resources required to manage urgent flights at short notice,” Daniel Carriett, Global Cargo Director at CharterSync, said. “We’re very pleased we could help process this important consignment at such short notice, with this flexibility being one of the core benefits of Teesside’s fully accredited cargo handling facility. From our cuttingedge security screening to great onward transport links, businesses can be confident of top-quality service from our team,” Walter Jones, Head of Cargo at Teesside International Airport, said.
WFS celebrates new baggage handling and CIP Terminal contracts in Hong Kong and Singapore
WORLDWIDE Flight Services (WFS) has announced that it has secured two significant contracts in Asia for baggage handling services at Hong Kong International Airport (HKIA) and the renewal of its Commercially Important Passenger (CIP) Terminal Services contract in Singapore. In Hong Kong, WFS will commence its new baggage handling responsibilities on behalf of the Airport Authority Hong Kong in January 2023 at the start of a three-year contract. This will cover the handling of out-of-gauge (OOG) baggage, HKIA VIP Lounge baggage delivery and baggage tub recycling as well as air-tosea and sea-to-air bags transported to HKIA’s baggage handling system. “We’ve been honoured to be part of the Hong Kong aviation scene since 1998, serving the Airport Authority Hong Kong and every airline at this outstanding international airport. We are an integral part of every air traveller’s journey here and take great pride in contributing to the best possible passenger experience for everyone passing through HKIA,” James Carey Jr., WFS’ Regional Managing Director, Hong Kong & Singapore, said. In Singapore, JetQuay – the airport services and passenger experience specialist majority owned by WFS – has successfully renewed its contract, with effect from January 2023, to operate the airport’s elite CIP Terminal. It provides a comprehensive range of VIP services for travellers, including airline check-in and immigration clearance, a luxury lounge as well as limousine service to escort high priority guests to and from their aircraft. “JetQuay has operated the CIP Terminal for over 16 years, prior to this latest contract renewal, and we are immensely honoured to continue to gain the trust of the airport authority to serve Changi Airport’s VIP guests and to ensure the best-in-class service and comfort levels they deserve. This new contract reflects the airport’s trust in the JetQuay team’s ability to maintain these high standards and to make Singapore an airport of choice for VIP travellers,” Abraham Lim, General Manager at JetQuay, added.
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Boeing forecasts air cargo traffic to increase twofold over the next 20 years
THE tumultuous effects of the pandemic in the last two years have upended expectations and caused challenges for long-term planning and analysis. However, the overall aviation and aerospace industries remain resilient and that extends to the air cargo market. Boeing is forecasting strong demand for air cargo services through 2041 in its 2022 World Air Cargo Forecast (WACF), with traffic doubling and the world’s freighter fleet expanding by more than 60%. Post-Covid return Airlines around the world boosted air cargo capacity in response to global transportation needs during the COVID-19 pandemic. With supply chain challenges easing and recovery of long-haul international passenger networks progressing, the industry is now shifting focus to the evolving needs of air cargo demand and networks in the years ahead. “While the air cargo market is returning to a more normal pace after historic demand in the last two years, structural factors including express network growth, evolving supply chain strategies and new cargo-market entrants are driving sustained freighter demand,” Darren Hulst, Boeing’s Vice President of Commercial Marketing, said. “In the global transportation network, air freighters will continue to be a critical enabler to move high-value goods, in increased volume across expanding markets.” World’s expanding cargo fleet The 2022 WACF projects that the world’s cargo fleet will require nearly 2,800 production and converted freighters for growth and replacement through 2041. With cargo traffic doubling over the forecast period, operators will need to switch to more capable, fuelefficient and sustainable jets like the 777-8 Freighter to meet demand, according to the forecast. A third of deliveries will consist of new
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production freighters, while the remaining two-thirds will be freighter conversions, such as the 737-800 Boeing Converted Freighter (BCF), providing carriers with increased flexibility in existing and emerging markets. With the global freighter fleet set to grow to over 3,600 aircraft in the next two decades, the forecast anticipates that the Asia-Pacific region will be a key area for expansion, taking delivery of nearly 40% of all new and converted freighters. “Assuming that some of this global disruption does go away sometime in 2023, 2024 could be a very strong year. We have seen the world freighter fleet expand by 300 since 2019. We’re talking an industry that right now only has about 2,250 aircraft in service,” Hulst stated. Impact of e-commerce Rapid expansion in e-commerce is expected to boost air cargo growth. Air cargo packages are generally not identified specifically as e-commerce by shippers, and airmail shipments are typically bundled in bags with assorted documents and parcels. However, it is clear that e-commerce is revolutionising customer expectations and air cargo logistics. Global e-commerce revenues are expected to more than double pre-pandemic levels by 2026, reaching $8.1 trillion—up from $3.4 trillion in 2019, and five times higher than the $1.5 trillion spent in 2015. While domestic e-commerce business is often supported by large ground networks, growth in cross-border e-commerce, as well as emerging markets without well-established postal and ground networks, will promote an increased role for air cargo. While e-commerce is a global phenomenon, market size and growth vary by country. China represents the largest e-commerce market in the world, after overtaking the United States in 2013.
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ADVERTORIAL
Solidarity Transport Hub set to integrate air, rail and road transport in Poland, boost people’s mobility and improve supply chains in Europe
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oland’s new transport development programme is expected to serve tens of millions of passengers from 2028, integrating air, rail, and road networks to improve the flow of passenger traffic and cargo transport through the region. The new greenfield airport named Solidarity Airport, the construction of which was initiated by the Polish government will be strategically located in the centre of the country between the capital city of Warsaw and Poland’s third largest city, Łódź. Boosting connectivity and ease of mobility STH rail investments include a total of 2,000 kilometres of new lines, in particular highspeed railway lines, to be built by the end od 2034. The STH Rail Programme consists of a total of 12 railway lines, including 10 “spokes” connecting various regions of Poland with Warsaw and the Solidarity Airport. The new network is expected to provide access within a maximum of 2.5 hours from most major Polish cities to the new airport and the country’s capital. What is more important, the construction of the Solidarity Transport Hub will provide much more convenience, saving travelers’ time and money. Planning a trip abroad will no longer require hours of searching for connections or using transfer hubs in nearby countries. Instead of that, travelers will be able to reach such destinations as Australia, South America or Africa directly from the center of Poland via an airport that will be connected by high-speed railway network to provinces and cities across the country. By 2060, the Solidarity Transport Hub is about to attract ca. 850 million additional passengers, according to air traffic forecasts by the International Air Transport Association (IATA). It is expected to reach 40 million passengers in 2035, 50 million in 2044 and 65 million in 2060.
STH moves forward Planning and preparatory work for the implementation of this largest infrastructure investment in Poland for over 70 years began in 2017. In the first half of this year alone, the investor’s variant of the Solidarity Airport was presented, along with the accompanying infrastructure. More than a dozen months ago the STH company has launched hydrogeological studies (drilling, water and soil sampling, laboratory tests) at the airport construction area. At the same time, the nature inventory was completed and the nature inventory report was finalised. Contractors have also been selected in the tender for preparatory/construction work at the airport construction site, and a number of other key tenders have been announced.. To respond to ahead needs, the STH company announced, among others, preliminary market consultations for the implementation of construction works for railway investments. Now, the STH company conducts preparatory works (e.g., feasibility studies) at 1300 km out of 2000 km new railway lines. The whole railway part of the STH project should be completed by 2034.
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Enhancing security Even though the Solidarity Transport Hub is dedicated to civil aviation, the investment has been recognised by former commander of US ground forces in Europe General Ben Hodges for capability and capacity that “no other transport hub in Poland or elsewhere in Eastern Europe can match”. This allows to increase the security of the region by providing it with the appropriate transport capabilities to enable the smooth and efficient transfer of military units, equipment, goods, or humanitarian aid when needed. A significant advantage of STH, compared with other similar projects, is the intermodality and excellent connection of the airport with every part of the country and key European destinations. Despite its “civilian nature”, STH is also of significant importance from the point of view of our country’s and Europe’s defence. Of course, it will not be a military base, but nevertheless an extremely important part of NATO’s eastern flank – If only because of significant increase of military mobility,” said Minister Marcin Horała Government Plenipotentiary for the Solidarity Transport Hub. Taking care of the environment Currently, air cargo usually arrives in Poland by landing and taking off from airports in nearby countries before making the final journey to the country by road. This means that goods reach Poland in the least eco-friendly way and customers are paying more for goods due to increased transport costs. The construction of STH will solve these problems, reducing the negative impact of transportation on the environment and reducing costs for domestic consumers. IATA forecasts that the Solidarity Airport could gain up to 20% of market share in Central and Eastern Europe in the short term. Without it, Poland risked missing out on 35 million tonnes of cargo by 2060. Instead, it has a potential to become one of the largest cargo hubs in the region, handling 1.76 tonnes per year by 2060, according to IATA. International cooperation At the beginning of the summer vacations, representatives of the boards of RB Rail AS and STH met in Riga to discuss the possibilities and forms of cooperation. As a result, the both parties signed an agreement aimed at coordinating of plans, activities, and the exchanging of expertise. Rail Baltica is a greenfield rail transport infrastructure project aimed at integrating the Baltic countries with the rest of the European rail network. It foresees the construction of a new 870 kilometre-long electrified double-track railway line through the three Baltic countries and connecting it to Poland and Finland. The width of the new railroad line will be 1435 mm (standard European gauge) and its route includes: Tallinn Parnava - Riga - Panevėžys - Kaunas, the Polish-Lithuanian border, and the KaunasVilnius connection. “The countries of the Central and Eastern European region can bring unique value to the entire EU. The Solidarity Transport Hub iscommitted to developing a common railway network for our region. Signed agreement is a major step towards cross-border integration leading better connections and greater cohesion”- said Mikołaj Wild, CEO of STH.
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In 2021, the Chinese market surpassed $2 trillion, more than double the United States market, which is estimated at $960 billion. The European market was roughly one third the size of China’s market, at $665 billion, in 2021. While currently much smaller, many emerging markets such as India and Brazil are now seeing high growth and rapid network expansion. “A lot of people these days are talking about the rise of e-commerce, especially during the pandemic and it’s undoubtedly a big engine of growth right now,” Hulst added. Indispensable freighters Freighters are critical for airlines competing in air cargo markets. While nearly half of the world’s air cargo has historically been carried in the bellies of passenger aeroplanes, freighters are a key component of the customised scheduling and operations flexibility that many air cargo customers need. As a result, airlines with main-deck freighters in their fleets earn 90% of the air cargo industry’s revenue. While increasingly capable wide-body passenger aeroplanes helped the air cargo industry grow in the decade preceding the pandemic, Boeing expects dedicated freighters to continue to carry at least 50% of the world’s air cargo traffic, even after longhaul passenger networks recover to pre- pandemic levels and beyond. There are several key reasons for freighter preference in air cargo flows: Most passenger-belly capacity does not serve key cargo trade routes; twin-aisle passenger schedules often do not meet shipper timing needs; freight forwarders prefer palletised capacity, which is not available on single-aisle aircraft; passenger bellies cannot transport hazardous materials and project cargo; two important sectors in air cargo flows, and payload-range considerations on passenger aeroplanes may limit cargo carriage, increasing the risk that cargo will fail to arrive on time. “Not all that long ago, there were some that debated the value
of freighters,” Hulst said. “Many were actively talking about how the industry doesn’t need dedicated freight aeroplanes. But nothing could be further from the truth. Even in the worst of times, more than half of air cargo traffic has been carried on freighters.” The COVID-19 pandemic highlighted the importance of maindeck freighters in the global air transportation system. With high air cargo yields and greatly reduced long-haul international networks, conditions are favourable for many airlines to use passenger wide-body fleets for cargoonly operations, in order to generate much-needed cash flow and industry capacity. These “preighters” replaced some of the capacity shortfall, and even (in some cases) generated quarterly profits for carriers, despite minimal passenger operations. While long-haul passenger operations are still recovering, enough passenger capacity has returned to most markets that almost all preighter operations have been discontinued. In normal times, aeroplanes generate more revenue in passenger service. However, the experience of the past two years has highlighted the value of cargo operations. For airlines looking to diversify risk and operations coming out of the pandemic, that experience has provided an incentive to incorporate cargo operations in their network and fleet planning. New players Some shipping companies are exploring a shift to more vertically integrated operational strategies. Historically, freight forwarders were the primary interface between producers and shipping companies. Some shipping companies now aim to compete in the freight-forwarder space by developing their own full-service solutions. For customers, the value propositions here are the elimination of modal uncertainty and the de-risking of service levels. To provide this integrated mobility of goods, some shipping container and logistics companies are acquiring airplanes to provide the promised range of service levels.
This trend suggests some aggregate movement of shipping volumes from sea to air. While the volumes will not likely be large relative to total global trade, even small shifts toward the speed, reliability, and risk mitigation of air could be significant, considering that air cargo now represents only about 1% of global trade volumes. In addition to growth among established logistics providers, markets are seeing a range of air cargo newcomers, including a spurt of operations growth for smaller general-freight and express airlines. A fleet analysis in the fourth quarter of 2022 revealed roughly 40 more operators than pre-pandemic. In addition, some belly-only operators have added main-deck freighters to their fleets, in efforts to diversify revenues. Asia leads the way East Asian markets lead the global air cargo forecast in both volumes and growth rates. Today, the Transpacific and Europeto-East Asia air cargo flows are the largest. By the end of the forecast period, the intra-East Asia region will become the third largest global market, up from the number-five position in 2021, with 5.7% projected average annual growth. Driving this shift will be increasing goods production and booming consumer markets. Industrial production, trade, and express-market growth are forecast to propel traffic growth of 5.3% in the domestic China market, the second fastest-growing flow in our 20-year forecast. The intra-North America and Transatlantic air cargo flows will round out the top five markets by the end of the forecast period, with large markets today but slower growth rates due to the more mature market dynamics of Europe and the United States. In particular, Hulst cited India as an area to watch, stating how he has “never seen so many people really bullish about the future before.” As companies diversify their businesses, while China will “remain a world manufacturing powerhouse,” the inclusion of redundancy plans will see other Asian nations grow their markets, increasing the need to move cargo to/from them.
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MARKET OUTLOOK REPORT
TRENDS AND CHALLENGES THAT COULD SHAPE THE AIRFREIGHT MARKET IN 202
“External issues will continue to be one of the key challenges in the airfreight industry come 2023”
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t has been challenging for many industries around the globe, and the air cargo market has been no exception. With ongoing external issues, the sector has faced challenges across the board. “The start of 2022 saw sanctions and airspace closures introduced following the Russian invasion of Ukraine. This had serious implications, which included the need for significant re-routing due to no fly zones, as well as the global crude oil price surge reaching a high of $122.71 in June. These higher oil prices not only had a direct effect on the air cargo industry itself, but on the consumers and customers who stood to foot the bill,” Angus Hind, Air & Sea Director (Europa Air & Sea), stated. Coupled with new Covid outbreaks in the major Chinese export hubs of Shanghai and Shenzhen the virus caused further disruption throughout the last 12 months. Businesses such as Foxconn, one of Apple’s biggest suppliers, suspended operations in Shenzhen as China locked down the technology hub and several other regions to contain the country’s worst Covid outbreak in two years. The increasing port congestion and strikes across multiple industries has also meant that the shift to airfreight demand has increased. As a result, airfreight rates in 2022 remained relatively high in comparison to the trends we have seen in other freight modes. “Nevertheless, whilst 2023 looks set for some turbulence along the way, there is hope of a brighter future. So, what’s in the pipeline for the next 12 months? Whilst many of us were hoping that supply chains would see a return to normality by the end of 2022, analysts have predicted that equilibrium is unlikely to return before the end of 2023,” Hind added.
The Outside World External issues will continue to be one of the key challenges in the airfreight industry come 2023. Strikes across multiple industries will have a knock-on effect within the logistics sector, meaning that businesses need to have rigid contingency plans and policies in place to protect not only themselves, but their customers too. “The war in Ukraine is still creating uncertainty, and who knows what the real impact of this will be. But with no-fly zones sanctions and increasing costs due to route diversions,
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the war will present a significant number of obstacles,” Hind said. The ongoing conversation around energy and oil prices is expected to plateau in H2 of 2023. Like everyone facing cost of living ramifications, a drop in oil and energy prices should positively impact customers as businesses lower fees in correlation with fuel prices. “As we know, the cost of living is one of the key issues that consumers as well as businesses are having to face. With financial decision makers across all industries looking to tighten their belts, ensuring that the movement of goods and use of freight services remains smooth will be an ongoing issue,” Hind stated.
Air Space Movement At present, airlines like ANA in Japan and Singapore Airlines are still not back to their pre-Covid flight capacity but hope to be by the end of 2023/2024. After an unstable 2022, coupled with sky high rates, we are gradually going to see prices level off. For the industry, Europa Sea & Air expect to see an increase in the number of air cargo customers airfreight returns as a preferred method of goods transportation. However, despite the encouraging signs, it is likely it will be many years until airfreight volumes return to their pre-Covid levels. “As the aviation industry continues to steadily open back up, we’re going to witness a market shift as we see capacity increase, driving the supply and demand ratio down,” Hind explained.
Finding The Supply & Demand Balance The global appetite for cargo is expected to continue to decrease in line with 2022 for H1 of 2023, with the cost of living being one of the key drivers. Coupled with the fact that sea freight rates are down by 85% for the last year, this means that air and sea freight were at comparable levels for a short time, a data set that previously would never have been on par. “Rates are one of the key drivers that will see the market balance out, and by H2 of 2023 we should start to see costs decrease gradually in line with supply and demand, as the uptake in passenger planes increases. While we will always see spikes in freight consignments around big holidays, such as Chinese New Year and Golden Week, freight volume is still
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expected to be lower compared to the previous two years, due to worldwide demand not being as high,” Hind said.
Information in Real Time Although airfreight service’s uptake is still not as high as it was pre-Covid, customer expectations have changed. Thanks to the increased use of technology in the workplace, and reliance on digital tools to improve efficiencies, accessible technologies are the future of the freight industry. “Operating in a world where we have become so accustomed to having instant access to information at the touch of a button, as we move to 2023, customers will want to have the option to track and locate cargo in real time. Customers will want to access online portals to quote, track and book shipments at origin. This is a trend we will see increase exponentially, as well as one that many businesses including Europa Air & Sea will introduce,” Hind added.
Expanding The Footprint Research has revealed that 80% of UK businesses that trade overseas plan to grow their global footprint in the next five years, an opportunity with huge potential for the airfreight industry. With many major routes not operating daily at present unless it is geographically feasible and financially viable, 2023 could be the year that further afield aviation routes are finally explored. “We will also start to see logistics businesses expanding their physical office locations to mirror the increasing demand from businesses, with businesses such as Europa Air & Sea opening new offices in Q1 of 2023 in Delhi and Rotterdam, with more to follow,” Hind predicted. “As the last few years have shown, and as we approach 2023, airfreight and logistics businesses need to plan and prepare for any challenge that may lie ahead.”
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VIEW FROM THE MAINDECK AIR FRANCE-KLM CO₂ EMISSIONS REDUCTION TARGETS FOR 2030 APPROVED BY THE SBTI
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he Air France-KLM Group and its airlines are committed to reducing their environmental footprint as part of a transparent and responsible approach to sustainability, including a commitment by Air FranceKLM to reduce its well-to-wake scope 1 and 3 jet fuel greenhouse gas protocol emissions by 30% per revenue tonne kilometre (RTK) by 2030 compared to 2019. Having submitted its targets to the Science Based Targets initiative’s (SBTi) Target Validation Team, the group recently received approval, confirming they are in line to meet their goals. “The group designed a consistent approach, developed within the group’s Destination Sustainability strategy, with the goal of CO₂ emissions reduction based on three main pillars: fleet renewal, sustainable aviation fuel, operational measures,” Benjamin Smith, CEO of the Air France-KLM Group, said. “The SBTi targets approval is a key element for the group to ensure that Air France-KLM decarbonisation strategy is consistent with scientific objectives.” “Faced with the climate emergency, alongside all airlines in the Air France-KLM Group, Air France is taking responsibility and is fully committed to reducing its carbon footprint,” Anne Rigail, CEO of Air France, said. “This year, we created a tailor-made strategy called Air France ACT...The approval of our 2030 CO₂ emissions reduction by the SBTi confirms the robustness of our decarbonisation roadmap, and we will continue to transparently share our actions and results with our customers and the general
public.” “Together with Air France-KLM and Air France, KLM has strong ambitions when it comes to making aviation more sustainable and balancing the development of our network with the environment,” Marjan Rintel, CEO of KLM, said. “This requires fundamental decisions regarding our fleet, our operations, and our fuel use. The Science Based Targets and the associated CO₂ reduction direction provides clarity and, at the same time, entails major challenges. To make them feasible, we work closely with each other and with our sector partners to develop technical solutions and innovations that support the energy transition in aviation.” The Air France-KLM Group is committed to reducing the environmental impact of its activities. To do so, the Group has established a decarbonisation objective based on three main levers aggregated within the ‘Destination Sustainability’ programme. These include an ambitious plan to modernise and renew its fleet of aircraft, using sustainable aviation fuel and improving operational efficiency. The Science Based Targets initiative (SBTi) is a global body enabling businesses to set ambitious emissions reductions targets in line with the latest climate science. The initiative is a collaboration between the Carbon Disclosure Project (CDP), the United Nations Global Compact, the World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). The SBTi independently assesses and validates companies’ CO₂ emissions targets based on a scientific approach and criteria.
Saudi Arabia unveils proposal to boost Riyadh’s position as a global logistics hub CROWN Prince Mohammed bin Salman bin Abdulaziz, Prime Minister and Chairman of the Council of Economic and Development Affairs (CEDA), Chairman of the Public Investment Fund (PIF), has announced a plan for King Salman International Airport which will boost Riyadh’s position as a global logistics hub, stimulate transport, trade and tourism, and act as a bridge linking the East with the West. The airport project is in line with Saudi Arabia’s vision to transform Riyadh to be among the top ten city economies in the world and to support the growth of Riyadh’s population to 15–20 million people by 2030. The proposal would aim to turn King Salman International Airport into one of the world’s largest airports covering an area of approximately 57 km2, allowing for six parallel runways and including the existing terminals named after King Khalid. It will also include 12km2 of airport support facilities, residential and recreational facilities, retail outlets, and other logistics real estate. The airport would aim to accommodate up to 120 million travellers by 2030 and 185 million travellers, with the capacity to process 3.5 million tonnes of cargo, by 2050. “It will become an aerotropolis centered around a seamless customer journey, world-class efficient operations, and innovation. Riyadh’s identity and the Saudi culture will be taken into consideration in the airport’s design to ensure a unique travel experience for visitors and transit travellers,” the press release said. With sustainability at its core, the new airport will achieve LEED Platinum certification by incorporating cutting edge green initiatives into its design and will be powered by renewable energy. The announcement comes as part of PIF’s strategy which focuses on unlocking the capabilities of promising sectors to enhance Saudi Arabia’s efforts in diversifying the economy, and it is in line with the National Transport Strategy and the Global Supply Chain Resilience Initiative. The new airport is expected to contribute 27 billion Saudi riyals annually to non-oil GDP and to create 103,000 direct and indirect jobs, in line with Vision 2030 objectives.
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