As ecommerce soars and global trade accelerates, the demand for air freight solutions is a boarding pass to the future. But can capacity keep up with the industry's rapid ascent?
BY TOM GRESHAM
decade, the ‘China Plus One’ strategy [sourcing from an additional region to diversify beyond China] has been in place, and it gained momentum due to ongoing U.S.-China tensions amid the pandemic,” Liu says. As a result, manufacturing facilities were established in a variety of emerging regions. “However, it’s worth noting that many carriers still lack direct services from emerging markets to Europe and the United States,” Liu explains. “Instead, they rely on connecting hubs like Singapore, Hong Kong, Taiwan, South Korea, and China. This situation creates a competitive landscape for capacity between developed and emerging markets.” Ecommerce growth from China and Southeast Asia is driving higher demand and straining capacity. By example, demand from China and Southeast Asia to Europe was up 31% year-over-year during the rst week of October 2024. “These levels already exceed volumes shipped during the traditional year-end
long-term block space agreements with commercial airlines,” Liu says. “This has resulted in less cargo capacity from commercial airlines.” The pandemic-driven surge in ecommerce left a lasting impact on the airfreight industry, pushing companies to optimize their logistics operations to handle the increased volume of goods requiring fast transportation. “The industry has accelerated the adoption of digital technologies to improve ef ciency and transparency— including better tracking systems, automated processes, and advanced data analytics to optimize routes and loads,” Sullivan notes. “The pandemic also highlighted the need for resilience and exibility in operations,” he adds. “Airfreight companies are now better prepared to handle disruptions, whether due to health crises, geopolitical issues, or other unforeseen events.” Emerging markets also play a crucial role in airfreight trends.“For nearly a
peak season in 2023, meaning the industry is braced for an extremely challenging end to 2024,” says Wenwen Zhang, airfreight analyst at Xeneta, a rate benchmarking and market analytics platform for ocean and air freight. CAN CAPACITY KEEP UP? From a capacity standpoint, airfreight was up 1% globally according to Xeneta’s October data, though market dynamics can vary sharply at the regional and corridor level. For example, capacity from Northeast Asia to Europe increased 21% year-over-year while it decreased 6% from Europe to Latin America. “Airlines drive revenue by shifting capacity to corridors with the highest freight rates and volumes, so a shipper’s experience of the market very much depends on where they transport goods to and from,” Zhang says. The impact of cross-border ecommerce is most apparent in how airlines choose to deploy capacity.
November 2024 • Inbound Logistics 43
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