Alex Veitch asks: what does the future hold for air freight?
While 2018 presented many challenges to the air freight sector – most notably the ongoing uncertainties surrounding Brexit – the future looks bright for this buoyant industry. After several years of stable but lacklustre growth, 2017 saw a marked increase in air cargo traffic, with an impressive growth of ten per cent. And this trend is set to continue into 2019, with the biennial Boeing World Air Cargo Forecast predicting air cargo operators will need more than 2600 freighters over the next two decades to keep up with increasing global freight traffic. With a positive outlook – but mindful of the struggles ahead – FTA’s Head of Global Policy, Alex Veitch shares what is in store for the future of air freight.
Currently, the majority of UK air freight – over 60 per cent – is flown as bellyhold cargo via Heathrow Airport. The East Midlands Airport and London Stansted Airport currently take the lion’s share of freighter and integrator cargo, together accounting for over 20 per cent of all UK air freight in 2017. And with the growth of long-haul destinations at other airports, such as Manchester and Gatwick, FTA expects to see bellyhold air freight expand into other airports and to steadily increase in the coming years. But for passenger bellyhold cargo to really take off, a third runway at Heathrow Airport – approved by the government in June 2018 – must be constructed and made operational as soon as possible. Currently, there is no room for additional slots at this congested airport. In the meantime, operators must make the best use of existing capacity at other airports, and the government must take a balanced and reasonable approach to night flights to enable freighters to operate, while acknowledging the concerns of local communities.
Brexit is the cause of much uncertainty for the air freight sector, and prospects for the coming years depend to a large extent on the shape of the final deal. In a no-deal scenario, it is conceivable that short-haul air freight could pick up some additional just-in-time freight in the event of delays in Ro-Ro routes. Although air cargo only accounts for less than one per cent of global trade by tonnage, it transports $6 trillion worth of goods every year, signalling the high value and specialist nature of these items. And the volume moved by Ro-Ro is so substantial that air freight cannot provide a complete substitute for this mode. More worryingly, a no-deal scenario could, in the long-term, reduce the attractiveness of the UK as a passenger hub, which, in turn, will impact freight. Non-EU airlines may prefer to switch their hubs from Heathrow to a continental airport, reducing UK direct connectivity.
The biennial Boeing World Air Cargo Forecast highlights an interesting emerging air cargo trend which will continue into this year: e-commerce. Modern buying and selling patterns are facilitated by the fast movement of goods and air travel, which combines speed, flexibility and availability, offers just this. China dominates the e-commerce market, with sales growing almost 40 per cent in the last five years; this has contributed to the soaring demand for e-commerce air cargo.
While there are still some potential risks around the corner, such as ongoing Brexit uncertainty and rising trade tensions between China and the US, it is promising to see an optimistic growth forecast. FTA hopes to see all sides of the air cargo industry working together continue to grow this crucial part of the logistics chain, and work in partnership with their customers to improve efficiency and transparency.
Efficient logistics is vital to keep Britain trading, directly having an impact on more than seven million people employed in the making, selling and moving of goods. With Brexit, new technology and other disruptive forces driving change in the way goods move across borders and through the supply chain, logistics has never been more important to UK plc.
Alex Veitch is Head of Global Policy at the Freight Transport Association (FTA). A champion and challenger, FTA speaks to Government with one voice on behalf of the whole sector, with members from the road, rail, sea and air industries, as well as the buyers of freight services such as retailers and manufacturers.