As international trade continues to evolve, the air freight industry is undergoing a transformation driven by fast-growing sectors like e-commerce, pharmaceuticals, and high-value goods. And while sea freight may cost less per kilo, the advantages of air freight give it a distinct edge in terms of value.

The statistics speak for themselves. According to the International Air Transport Association (IATA), air cargo accounted for only 1% of the world’s total freight by weight in 2023, yet represented a sizeable 35% of global trade by value – highlighting its importance to global supply chains. And it’s set to grow. Market analysts estimate the global air cargo market will expand at a compound annual growth rate of 5.32% from 2022 to 2027, rising from a S$395 billion industry in 2023 to a S$636 billion juggernaut by 2031.

With increasing demand for faster delivery times, greater transparency, and sustainable solutions, the logistics landscape is rapidly shifting.

Singapore, strategically located at the crossroads of major global trade routes, plays a pivotal role in this transformation – and stands to gain from being among the leaders in this evolution. As a leading air freight hub in Asia Pacific, Changi Airport is expanding to meet the expected surge in demand, with plans to increase cargo capacity to 5.4 million tonnes annually by 2030.

Singapore’s air freight industry is poised to lead a rapidly changing global market through investments in infrastructure and human capital, and from the key emerging trends that are shaping the future of logistics worldwide.

Often referred to as ‘Southeast Asia’s cargo gem’, Singapore is one of world’s busiest air hubs in the world – topping the World Bank’s 2023 Logistics Performance Index (LPI) on trade logistics performance. From pharmaceuticals to e-commerce, air cargo is essential to the movement of goods across borders, helping businesses maintain supply chain efficiency – and with eight air freight terminals and continuous investments in infrastructure, Singapore remains well-positioned to meet growing demand.

This positive trajectory is reinforced by both government initiatives and industry trends that prioritise sustainability, digital transformation, and operational efficiency. However, as competition increases, businesses in Singapore’s air freight sector must stay ahead of these developments.

The future of Singapore’s air freight industry is closely tied to the expansion of Changi Airport, particularly through the Changi East Development project – an ongoing infrastructure investment that will significantly increase cargo handling capacity from three million tonnes annually to 5.4 million tonnes. This expansion is essential for accommodating growing volumes of air freight, especially in the fast-growing pharmaceutical sector, which requires state-of-the-art temperature-controlled facilities.

In this area, Singapore has put itself in a position of leadership by establishing Pharma@Changi, an air cargo community dedicated to the handling of pharmaceutical shipments. Lim Ching Kiat, Managing Director for Air Hub Development at Changi Airport Group, explains the significance of Pharma@Changi. “As the first air cargo community in Asia Pacific to attain the IATA CEIV Pharma certification, the new Pharma@Changi initiative aims to further solidify the partnership among air cargo players at Changi Airport in strengthening Singapore’s capabilities, by jointly pursuing the best standards in pharmaceuticals air cargo handling.”

Nick Careen, Senior Vice President of Airport, Passenger, Cargo and Security at IATA, adds, “The Asian freight market is the largest in the world, accounting for 40% of total global trade. The creation of Pharma@Changi ... is great news for the supply of pharmaceuticals across the region. Pharma shippers at Changi Airport can now be assured that they are receiving the highest-quality service in terms of standardisation and transparency.”

With Singapore already handling over 375,000 tonnes of temperature-sensitive cargo annually, this sector’s growth will continue to propel air freight demand.

A key development shaping the future of air freight in the nation is the Singapore Sustainable Air Hub Blueprint, which outlines 12 initiatives and five enablers for decarbonising Singapore’s aviation sector and supporting sustainable growth – balancing environmental sustainability with the competitiveness of Singapore’s air hub. 

Announced at the Changi Aviation Summit 2024, the blueprint aligns with the International Civil Aviation Organisation’s (ICAO) global push for net-zero carbon emissions by 2050, as well as Singapore’s own target for net-zero domestic and international aviation emissions by the same year.

Key strategies include the use of sustainable aviation fuel (SAF) and improving energy efficiency across all of Changi Airport’s terminal buildings. Following the blueprint, the Civil Aviation Authority of Singapore (CAAS) will work with stakeholders to reduce domestic aviation emissions from airport operations by 20% (from 2019 levels) by 2030, before achieving net-zero domestic and international aviation emissions by 2050.

For businesses, this means adapting to stricter environmental regulations and investing in green logistics technologies to stay at the forefront of the industry.

To guide the industry along the path of sustainability, Enterprise Singapore and the Singapore Logistics Association (SLA) introduced the Sustainability Playbook for Logistics Enterprises, which provides guidance on integrating green practices into supply chains. This includes strategies in the areas of greenhouse gas emissions, energy and waste management, employee health and safety, data security, and more. For companies that can successfully adopt these strategies, the payoff is twofold – reduced operational costs and enhanced competitiveness in a market that increasingly values sustainability.

In addition to sustainability, digital transformation is another critical trend shaping the future of air freight. Technologies like artificial intelligence (AI) and predictive analytics are improving decision-making across the supply chain, from cargo tracking to inventory management – with AI being used to optimise route planning, reduce fuel consumption, and streamline operations.

Singapore is already a leader in the adoption of digital freight solutions, with logistics companies across the country becoming increasingly data-driven. By embracing this trend and adopting AI and automation into their processes, Singapore’s air freight companies can take a step forward – reducing operational costs, offering real-time visibility into shipments, and enhancing customer experiences.

As the air freight industry evolves, so too must its workforce. In Singapore, there is a growing emphasis on developing the skills needed to support the digital transformation and sustainability goals of the logistics sector. The government has launched multiple initiatives to upskill workers, including supply chain management (SCM) training programs and graduate diplomas in logistics and supply chain management.

Additionally, programmes like the Career Conversion Programme (CCP) and the SkillsFuture Career Transition Programme (SCTP) are available to help mid-career professionals transition into new roles within the logistics and air freight sectors. These initiatives focus on critical areas such as supply chain digitalisation, data analytics, and green logistics – ensuring the local workforce remains competitive and continues to meet the industry’s increasingly modern needs.

While Singapore’s air freight space is on an upwards trajectory, challenges remain on a global level – one of these is the ongoing issue of capacity growth outstripping demand, leading to downward pressure on freight rates. In fact, air freight capacity increased by 9% in 2024, while demand struggled to keep pace, creating a competitive international market where carriers vie for limited cargo pools.

For Singapore’s air freight businesses, navigating this challenge will require greater operational efficiency and a focus on differentiation through services, such as specialised cargo handling and advanced digital solutions.

The industry is also affected by broader geopolitical issues, such as the conflicts in Ukraine and Gaza, which have led to led to disruptions in airspace routes – resulting in rerouted flights, increased costs, delays, and other constraints. 

To mitigate such risks, air freight businesses need to invest in more flexible supply chains and contingency planning – and Singapore, with its strong network of international trade agreements and strategic location, is well-placed to help businesses adapt to these shifts.

Looking ahead, the IATA projects that the global air freight industry will grow by a modest 3.3% annually over the next 20 years, reflecting some of the challenges and infrastructure constraints the industry has been seeing in recent years. On a positive note, the IATA expects the Asia Pacific region to grow by a more ambitious 4.5% annually over the same period.

As a leading air freight hub in the region, Singapore is poised to benefit from this uptrend – and the nation’s investments in infrastructure, such as the ongoing Changi East Development, will be crucial in positioning Singapore to meet future demand.

One of the most significant drivers of future growth for the air freight industry is the e-commerce boom. With 80% of cross-border e-commerce shipments flown by air, the sector is set for further expansion as online shopping continues to grow – both globally and regionally. 

For businesses in Singapore, focusing on e-commerce logistics can provide a competitive advantage, particularly as Southeast Asia’s e-commerce market is expected to grow at a compound growth rate of 22%, reaching reach around $230 billion in gross merchandise volume in 2026.

As Singapore enters a new era of air freight growth, the industry faces both challenges and exciting opportunities. From sustainability initiatives to digital transformation, the future is bright for businesses that can adapt and innovate. With strong government support, advanced infrastructure, and a focus on building a skilled and adaptable workforce, Singapore’s air freight industry is well-positioned to thrive in the decade ahead.

The key to success will be embracing sustainability, enhancing operational efficiency, and investing in technological innovation. Businesses that lead in these areas will be well-placed to capitalise on the growing demand for air cargo services, not only in Southeast Asia but globally. As Singapore continues to expand its role as a logistics powerhouse, the country is set to remain a crucial player in the global air freight industry.