Air Freight Market Report

In recent years, there has been rapid growth in the world economy driven by a rise in international trade. The average growth in global commerce volume and value since 1995 has been 4% and 6%, respectively by 2023. Additionally, in the first quarter of 2024, global trade trends turned positive with the value of trade in goods increasing by around 1% quarter-over-quarter and services by about 1.5%. Global GDP growth is forecast at 3% for 2024, with global trade reaching nearly US$32 trillion, though not surpassing 2022's record. Trade progress in Q1 2024 was boosted by China (9%), India (7%), and the US (3%). Europe saw no growth, while Africa's exports declined by 5%. The expansion of international trade and globalization has driven demand for air freight, as businesses require faster, more efficient transportation of goods across long distances. Over 240 billion cargo tons kilometers (CTK) are transported annually, accounting for an estimated 35% of the value of global trade, making air cargo a crucial component of the present global trading system.

The rise of e-commerce, especially for high-value and time-sensitive goods has significantly boosted demand for air cargo services as consumers expect quick delivery, and air freight provides the most viable option for rapid transit. Around 2.71 billion individuals, or 33% of the world's population, buy online, contributing to the US$6 trillion e-commerce sector, which is expected to grow to US$8 trillion by 2027. The need for air freight for the quickest product delivery by e-commerce platforms is driven by the fact that there are more than 26.6 million e-commerce retailers worldwide, 34% of consumers purchase online at least once a week, while 52% of consumers look for products overseas. The exponential growth of e-commerce has fueled a significant increase in the demand for air cargo transportation as air cargo is naturally suited for this logistic challenge. As e-commerce grows, fast delivery demands surge, driving investments in air freight. Airlines and logistics companies expand cargo fleets, improve infrastructure, and adopt advanced tech to meet consumer expectations.

The air freight industry operates in a strict regulatory framework of both national and international authorities, which is essential to keep shipments safe and complying with the laws during cross-border shipping, while also supporting overall air freight market size growth. The International air transport association (IATA) enforces regulations for safe and efficient global air cargo transportation and oversight is provided by specialized groups including the Hazardous Goods Board (HGB), Time and Temperature Working Group (TTWG), and the Live Animals and Perishables Board (LAPB) which manage rules for special cargo distribution. Additionally, IATA manuals are updated annually to reflect the latest regulations, trends, and best practices in air cargo and ground handling. Expert working groups including the Dangerous Goods Board and Live Animals and Perishables Board, ensure accuracy and compliance with evolving standards.

The pharmaceutical industry transports over US$1 trillion worth of cargo annually which presents a significant opportunity for the air freight market, especially in handling time- and temperature-sensitive products. Ensuring the integrity of healthcare shipments including vaccines and pharmaceuticals requires strict adherence to temperature control regulations, specialized equipment, and well-coordinated cold chain processes. IATA's Temperature Control Regulations (TCR) provide critical standards for the safe transportation of pharmaceutical products that address temperature management and require the mandatory use of Time and temperature-sensitive labels. Since 2012, this regulation has been mandatory for healthcare cargo, with the 11th edition of TCR effective from January 2023, further strengthening industry standards.

As the freight sector grows to meet rising global demand for healthcare products, the need for specialized logistics partners capable of managing these sensitive shipments presents a robust market opportunity. The Healthcare Cargo Working Group (HCWG) continues to develop new standards and training to support the evolving needs of healthcare logistics, positioning the air cargo industry as a key player in global healthcare distribution.

With the global air cargo market transporting huge amounts of goods annually, airlines and lessors are increasingly turning to passenger-to-cargo (P2F) conversions to meet this growing demand. In 2022, about 164 planes were converted to freighters, according to aviation data firm cirium. Converting older passenger aircraft to freighters offers a cost-effective solution, especially for aging fleets. Aircraft that have completed 12-15 years of passenger service can continue flying for up to 20 more years as freighters, providing a second lease on life. Conversions can increase cargo capacity by up to 30% and reduce fuel consumption per tonne by approximately 20%.

This presents a compelling opportunity for operators to expand capacity without the steep costs of new freighters. The need to replace aging aircraft, along with the ongoing rise in air cargo demand, is driving a constant requirement for freighters, reflecting emerging air freight market trends as many aircraft types are no longer in production, converting older models allows airlines to maintain fleet commonality while growing their cargo capacity.

• The surge in online shopping is driving increased demand for fast, reliable AF services
• The adoption of AI, blockchain, and IoT is enhancing transparency, efficiency, and real-time tracking in air freight
• Airlines are converting passenger aircraft into freighters to meet rising cargo demand amid travel restrictions
• The demand for temperature-sensitive goods, particularly pharmaceuticals, is accelerating growth in AF cold chain solutions, while innovative supply chain as a service models help streamline handling and monitoring of these shipments
• Airports are increasingly developing regional hubs to handle growing AF traffic more efficiently
• Continued high demand and limited capacity are driving up AF rates, especially for expedited shipments

The ongoing geopolitical tensions in the Middle East, particularly the conflict between Iran and Israel, have introduced profound shifts in the AF market. As disruptions in key maritime routes, especially in the red sea and strait of hormuz, escalate, many shippers have turned to air freight to bypass delays and uncertainties in sea transport. This shift has pushed backhaul spot rates typically lower-priced routes from the middle east to europe above fronthaul rates, reversing traditional pricing patterns. Factors such as airspace closures, vessel seizures, and disruptions at critical hubs like dubai airport have compounded the volatility. These disruptions have forced businesses to adopt hybrid sea-air logistics, further complicating supply chains and driving up costs. Additionally, operators are facing longer flight routes, higher fuel consumption, and capacity constraints due to the need to reroute flights around conflict zones.

These changes highlight a broader regional instability that threatens the viability of traditional transport routes and requires businesses to explore new transit options, such as sea-air routes via singapore. The surge in AF demand due to sea disruptions also intensifies competition for limited cargo space, further driving up costs. In response, the industry is leaning heavily on route diversification, technology, and enhanced risk management strategies to navigate the shifting landscape, underscoring the growing need for agility and resilience in global logistics.

Moreover, air cargo security and screening systems, along with customs clearance, remain critical restraints in the air freight market, Customs clearance involves navigating diverse regulatory frameworks and extensive documentation across multiple countries, with even minor errors leading to shipment delays and increased operational costs. This bottleneck demands companies stay updated on EXIM rules and engage skilled customs brokers to streamline the process. Meanwhile, cargo security requires rigorous measures to protect goods from theft or tampering. The implementation of tamper-evident seals, employee background checks, and secure facilities is costly but necessary. Airlines must invest heavily in advanced technologies, manpower, and compliance with global standards like TAPA, creating a significant financial and operational burden, which is a key aspect of ongoing air freight industry analysis.

The air cargo sector is experiencing a significant change, propelled by technological innovations, increasing demand, and evolving customer expectations. Advancements like automation, instant tracking, and customized logistics are transforming international commerce. These breakthroughs are enhancing operational efficiency, reducing costs, and accelerating delivery, enabling air freight to meet the dynamic needs of modern commerce with greater speed and precision. Cloud-based technologies have surged in popularity due to their robust data security, real-time transmission capabilities, and enhanced privacy, and by integrating Artificial Intelligence, these platforms enable precise, seamless processes, minimizing inconsistencies and inaccuracies that reduce reliance on human intervention.

For instance, in July 2022, Siemens Logistics announced its focus on automating and digitalizing airfreight and baggage handling, leveraging high-performance hardware, cloud-based software, and innovative solutions like VarioBelt TilterPlus and Baggage 360 to enhance airport efficiency as travel rebounds. Additionally, Turkish Cargo’s new Air Cargo Revenue Management (ACRM) system, powered by AI and machine learning, optimizes pricing with dynamic, real-time rates launched in March 2024. It enhances digital booking, offering competitive pricing for early bookings and flexibility for last-minute shipments.

The partnership between AI and robotics firms and precision automation providers introduces a groundbreaking, fully automated cargo handling system. This innovation enhances efficiency in AF operations, improving cargo storage, movement, and handling, including irregular shapes. By reducing labor costs and increasing throughput, it meets the growing demand for faster, more reliable AF services. For instance, in March 2023, Speedcargo, in collaboration with Güdel, launched the world’s first fully automated robotic freight handling solution for air cargo. This innovative system revolutionizes airport cargo handling by efficiently storing and moving diverse cargo sizes and shapes, enhancing operational efficiency, and transforming ground handling processes globally, contributing positively to overall air freight market outlook and influencing  market forecast expectations.

Furthermore, Banyan Technology partnered with GoComet in April 2024 to enhance its freight execution software with AI-powered ocean and air tracking and freight spend management. The integration offers real-time visibility, live shipment updates, and advanced data insights, providing Banyan’s clients with greater transparency, efficiency, and control over shipping operations.

Geopolitical strains, such as persistent Middle East disputes and US-China tariffs, have caused major interruptions in AF, leading to delays and cancellations of flights. Despite these obstacles, solid demand persists, fueled by booming e-commerce, continuing shipping delays, and technology shipments. Air cargo volumes are poised for double-digit growth in 2024, even amidst modest consumer spending in the US and Europe. The Americas, particularly North and Latin America, have seen a significant impact from e-commerce growth. The demand for cargo increased by 8.7% for North American carriers in May 2024, while trade between Asia and North America increased by 12%. Latin American carriers grew 12.7%, while U.S. e-commerce is projected to grow 10.8% by 2025, reaching US$1.39 trillion. The need for quicker and more effective delivery solutions is fuelled by this expansion. Airlines are adapting with innovations like Delta Cargo's DeliverDirect, while sustainability remains a key focus, with carriers aiming for net-zero emissions by 2050.

Europe's air cargo sector is expanding because of its robust industrial foundation, trade connections, and logistics systems, with major economies such as Germany, the U.K., and the Netherlands leading the export of machinery, automotive components, and pharmaceuticals. Air Cargo Europe is the leading event for the worldwide AF sector, promoting innovation and encouraging high-level networking. Conducted twice a year in Munich, the exhibition is part of transport logistics, providing a venue for displaying advanced technologies and systems. The achievement of the 2023 edition, spanning 15,000 square meters, emphasizes the increasing global demand in the sector. The main factors contributing to this success are the swift advancement of e-commerce, the transition toward digitization and automation, and the growing demand for supply chain resilience. These elements, combined with an emphasis on sustainability and operational effectiveness, keep influencing the future of AF in Europe.

India's growing aviation sector is positioning the country to emerge as a worldwide air cargo center by 2030 and as part of this growth, Indian airlines are projected to expand their fleets, with an expectation of 150 widebody aircraft by 2035. In addition to fleet modernization, major hubs like Delhi and Mumbai are experiencing infrastructure improvements to manage increased freight capacity. The complementary approaches of Air India’s long-haul network and IndiGo’s short-to-medium-haul routes will further enhance India’s position in the global air cargo supply chain. In Asia, major air cargo centers such as Hong Kong (HKG) and Shanghai Pudong (PVG) lead the market, specializing in electronics and industrial products, whereas Incheon (ICN) concentrates on semiconductors. Indian airports, with strategic geographic locations, are positioned to tap into these growth opportunities by leveraging emerging infrastructure and expanding fleet networks to attract international traffic and cargo.

Geographic Coverage of the Report:

• Detailed segmentation and segment-wise breakdown of the AF market by service type, shipment mode, cargo category, and end-use industry, highlighting contribution patterns and operational priorities across each segment.
• Quantitative assessment of market size and projections over the forthcoming ten years, including valuation in US$ Mn, shipment volumes in units, CAGR, Y-o-Y growth trends, and evolving market share dynamics within the AF market.
• Analysis of market drivers, restraints, opportunities, and threats using a DROT framework, emphasizing factors such as global trade flows, e-commerce expansion, fuel cost fluctuations, and regulatory impacts affecting operational efficiency.
• Comprehensive demand analysis examining evolving shipment patterns, client preference shifts, seasonal peaks, and cargo type diversification shaping procurement and logistics strategies in the AF market.
• Pricing analysis exploring cost structures, surcharges, and freight rate fluctuations across different service tiers, alongside the impact of fuel hedging, fleet utilization, and infrastructure capacity on profitability.
• Regional insights and country-level market forecast for the next decade, assessing network density, gateway capacity, and hub optimization strategies that influence the competitive landscape of the market.
• Competitive analysis highlighting carrier profiles, fleet scale, alliance formations, mergers & acquisitions, and innovation pipelines that determine positioning and resilience within the market.
• Examination of supply chain and value chain integration, regulatory frameworks, parent industry linkages, sales and distribution strategies, latest technological developments, and research methodology supporting strategic decisions in the AF market.