Industry Articles

Flying High

AF1819_ED01_pix1These are good times for global airfreight. Demand is heading up and with it the yields enjoyed by industry players.

Fuelled by the need to restock quickly as economies expand, volumes rose 9% in 2017, twice the pace of world trade expansion (4.3%), while freight capacity, measured in available freight tonne kilometres (AFTKs), increased by a slower 3%, the slowest annual capacity growth seen since 2012.

“Air cargo had its strongest performance since the rebound from the global financial crisis in 2010. Demand grew by 9%. That outpaced the industry-wide growth in both cargo capacity and in passenger demand. We saw improvements in load factors, yields and revenues. Air cargo is still a very tough and competitive business, but the developments in 2017 were the most positive that we have seen in a very long time,” said Alexandre de Juniac, International Air Transport Association (IATA)’s Director General and CEO.

Growth may have eased, but the outlook remains promising. Said Mr de Juniac, “The outlook for air freight in 2018 is optimistic. Consumer confidence is buoyant. And we see growing strength in international e-commerce and the transport of time and temperature-sensitive goods such as pharmaceuticals. Overall the pace of growth is expected to slow from the exceptional 9% of this year. But we still expect a very healthy 4.5% expansion of demand in 2018. Challenges remain, including the need for industry-wide evolution to more efficient processes. That will help improve customer satisfaction and capture market share as the expectations of shippers and consumers grow ever more demanding.”

While restocking cycles are usually short-lived, the spike in e-commerce sales will buttress demand. The pharmaceuticals and healthcare segment is also expected to show tremendous growth.

Looking ahead, Transparency Market Research projects that global air cargo will grow at a compound annual growth rate (CAGR) of 4.9% between 2017 and 2025, to US$130.12 billion at end 2025. The Asia Pacific will outstrip the global average by posting a CAGR of 5.3% and remain the world’s largest market.

Major Expansion at Singapore Changi Airport
As a key transport node, Singapore reaped the benefits of improving trade. Airfreight throughput rose 7.9% to a record 2.13 million tonnes in 2017, outperforming passenger traffic, which edged up by 6% to a record 62.2 million passenger movements.

Increases were registered across all sectors with exports posting the highest gain of 14%, followed by imports 8% and transhipments 4%.

Encouraged by the strong performance, Singapore has unveiled plans for a new airfreight facility. Named the Changi East Industrial Zone (CEIZ), it is part of Changi Airport’s mega Changi East project. The new facility will consist of air freighter terminals, air cargo express facilities and hangars for maintenance, repair and operation services. When completed, it will increase Singapore’s annual air cargo handling capacity from 3 million tonnes to 5.4 million tonnes.

“This strong growth that we are experiencing right now in the air cargo sector puts us in a very good position to grow and transform the sector,” said Carol Chong, director of logistics, Economic Development Board (EDB).

The new facility will employ data and technology to improve work flow processes and raise efficiency and productivity. “It is a sector that has very strong dependency on labour. So automation and digitalisation will actually pave the way for more manual and labour-intensive jobs to be augmented. And create more meaningful and purposeful job roles, functions and activities for the workers of the future,” she said.

“We are also trying to get new capabilities for Changi’s cargo handling by introducing robotics and more autonomous vehicles, and other technologies that will potentially lead to more efficient ways of handling cargo, and maybe result in paper saving and more efficiency for our cargo airline and cargo partners,” added Changi Airport Group’s managing director of air hub development, Lim Ching Kiat.

Phase one of CEIZ’s construction is expected to be completed by 2030. Its operations will be merged with the existing Changi Airfreight Centre via connecting taxiways.