EUROPEAN AIRFREIGHT PUSHING FORWARD DESPITE HEADWINDS

According to a research report published by Business Market Insights on “Europe Air Cargo Market Forecast to 2028 – COVID-19 Impact and Regional Analysis,” the continent’s airfreight market is expected to grow from $30.27 billion in 2022 to $43.29 billion by 2028; at a CAGR (Compound annual growth rate) of 6.1% from 2022 to 2028.

Online retailing attracts more prospective customers than brickand-mortar-based competitors due to the rapid usage of the internet by the 750 million population of Europe. In addition, e-commerce market players have a variety of logistics options such as modes of surface transport and air transport to deliver packages to their customers.

The majority of purchases are influenced by the demographics of European countries, which depends on several factors such as the percentage of the youth population indulging in e-commerce activity, the economy of the country, the age group interested in e-commerce and the level of awareness in these countries. The fast-growing crossborder e-commerce market remains a key driver of the Europe air cargo market growth. In addition to rising domestic volumes sent by large and small e-retailers, the Europe air cargo market growth is expected to witness significant growth opportunities during the forecast period.

Turkish Cargo, DHL International, Air France KLM Martinair Cargo, United Parcel Services Inc, and FedEx are among the leading air cargo market players profiled in the report. These air cargo market players have a well-established customer base along with diversified product offerings for customers. Further, these players have a large consolidated share of the Europe air cargo market. These companies are acquiring smaller vendors and capturing contracts from various end users from emerging countries across the world.

The Europe air cargo market is segmented on the basis of type, service, end-user and country. Based on end-user, the Europe air cargo market size is segmented into retail, pharmaceutical and healthcare, food and beverage, consumer electronics, automotive and others. By country, the Europe air cargo market is primarily segmented into France, Germany, the UK, Italy, Russia, and the Rest of Europe.

Study findings

Europe is the second-largest regional market in the global air cargo market. The UK, France, Germany, Italy and Spain are the key contributors to the Europe air cargo market in the region. The region has the presence of several major manufacturing industries. The automotive sector contributes significantly to the GDP of various European countries as well as employs billions of people in the region. Germany does not have large-scale consumer electronics production factories; however, the presence of massive automobile manufacturing firms has fuelled the trade, transportation and logistics operations between Germany and other countries in the world. On the other hand, economically strong countries such as Italy, the UK and Spain are generating huge demand for air cargo products and services for the optimisation of supply chains of pharmaceuticals, e-commerce, food and beverages processing and other industries. Further, advancements in the Industry 4.0 revolution and integration of machine learning and deep learning with automation are expected to provide significant opportunities for the efficient integration of air cargo in the supply chain operations in the coming years.

Moreover, the growth of the e-commerce sector and consumer electronics industry, as well as a surge in demand and sale of temperature-sensitive products, are propelling the Europe air cargo market growth.

Moreover, the presence of major globally operating air cargo market players such as Cargolux, Air France KLM Martinair Cargo, DHL, FedEx Express and United Parcel Service is one of the major factors catalysing the growth of the Europe air cargo market. The rising air cargo volume across different airports such as Frankfurt Airport, Munich International Airport, Maastricht Aachen Airport, London Heathrow Airport, Amsterdam Airport Schiphol and Liege Airport is another major factor bolstering market growth. For instance, according to the Frankfurt Airport Authority, the airport recorded an increase of ~18.7% in 2021 in its air cargo volume compared to the air cargo capacity of 2020.

Drums of war

Now that the disruptions to business and society in Europe caused by the Covid pandemic have generally eased, demand for air cargo in Europe has been hit by another blow: the ongoing conflict between Russia and Ukraine.

This continuing military adventure is negatively impacting European cargo capacity. As Russia is the second largest country in Europe, their invasion of Ukraine has led to airspace and landing restrictions for many Russian aircraft across different countries of Europe. For instance, the ban on overflight operations across Russian airspace territory has adversely affected the cargo shipments across international air transport operations. Since the invasion, several countries such as the UK, Germany, Lithuania, Estonia, Slovenia, Romania, Poland, Czech Republic, and Latvia have shut down their national airspace for Russian aircraft. In turn, Russia banned its national airspace to aircraft from some 36 countries, including all 27 members of European Union, Germany, Canada and US. This has led to a reduction in the number of cargo and passenger aircraft operations across these European countries and reduced many cargo operations of several cargo airlines.

Moreover, air cargo operations between Asia Pacific and Europe have been negatively impacted due to flight cancellations and route diversions that have also led to delays in cargo deliveries across these regions. The majority of the global cargo hubs have also witnessed major disruptions along with capacity reductions and flight rotations that have led to increased cargo rates across the world. Such factors have impacted negatively in the Europe air cargo market.

Market falters

The International Air Transport Association (IATA) has released data for February 2023 global air cargo markets showing that air cargo demand rose above pre-pandemic levels. While global demand, measured in cargo tonne-kilometres (CTKs), fell 7.5% compared to February 2022 (-8.3% for international operations), half the rate of annual decline seen in the previous two, February demand for air cargo was 2.9% higher than pre-pandemic levels (February 2019)—the first time it has surpassed pre-pandemic levels in eight months.

European carriers saw the weakest performance of all regions with a 15.3% decrease in cargo volumes in February 2023 compared to the same month in 2022. This was an improvement in performance compared to January (-20.4%). Airlines in the region continue to be most affected by the war in Ukraine. Capacity decreased 1.5% in February 2023 compared to February 2022, says IATA.

James Graham

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Norman Bamford • Dawn Jolley