Aviation, tourism and energy writer for the Business Herald

Air freight industry throttles back up

Cargo market estimated to be worth about $10 trillion a year is back to historic growth rates, says Boeing.
Electronics, fresh produce, pharmaceuticals and automobile parts are among the biggest categories of air cargo. Photo / Getty Images
Electronics, fresh produce, pharmaceuticals and automobile parts are among the biggest categories of air cargo. Photo / Getty Images

Air freight - a barometer of global economic activity - has recovered and is growing at sustainable levels, a transport summit has heard.

James Billing, managing director of market analysis at Boeing says while not boom times, the air freight market - estimated to be worth about $10 trillion - was back to historic growth rates.

"We've been through some rough years but things are getting better now," Billing said.

"I think you're seeing air cargo growth above GDP right now, it's always been seen as a leading indicator [of world trade]."

Air freight accounts for about 1 per cent of total trade by weight but 35 per cent by value, a session on aviation supply chains at the International Transport Forum in Leipzig, Germany heard.

Germany's Parliamentary State Secretary at the Ministry of Transport and Digital Infrastructure, Dorothee Bar, said a tonne of air cargo was typically worth around $110,000 while sea freight as little as $11,600.

Billing said the "alpha" nature of air cargo was illustrated recently with about 100 tonnes of iPhones, worth about US$150 million ($210 million) at market value, being loaded into a Boeing 777 freighter.

Goods landed at Heathrow, which is not a major freight hub, now exceeded the value of those landed at London's port.

For airlines such as Air New Zealand strong cargo can tip the balance on routes with passenger planes.

Billing said freighters still play a dominant role and airlines which only have belly capacity represent just 10 per cent of the air cargo business, whereas combination carriers with some freighters have about 40 per cent while the dedicated parcel services have about 38 per cent and then the specialist, the all-air freighter business has the remainder.

Between Europe and Asia about 75 per cent of freight is going by dedicated freighters, with 80 per cent across the Pacific on freighters.

"Freighters aren't going away and I'd encourage airports when they're upgrading their facilities to factor in the freighters and the need to factor in belly hold loading at gates where passengers get on," Billing said.

"Freight doesn't walk off the plane like passengers do. It needs to be connected to road or rail to get to their destination."

Billing said the air freight market had potential to grow but operators needed to work with governments and airports to improve the infrastructure. Bar said a central issue in Germany was operating times at airports.

"As economies recover we're going to see increases in air cargo of about 4 per cent to 5 per cent roughly in line with the rate of international trade growth," she said.

Air cargo potential gets stronger as countries such as China move up the value chain.

Electronics, fresh produce, pharmaceuticals and automobile parts were among the biggest categories of cargo shifted by air.

Concerns about the carriage of lithium ion batteries have led to some airlines to ban them.

Al Bedran, European transport manager for United Parcel Services (UPS) said his firm met all regulations of governments on how we handle dangerous goods on its aircraft. The company found out as much as possible about customers putting goods on the planes to ensure they were certified to handle dangerous goods.

"Where we see issues is where it's an unknown customer and that's where we take special precautions to ensure that all of our merchandise through our facilities and aircraft go through specific screening.

"There's a lot of work being done right now."

Lithium ion carriage is something UPS is "concerned about" but it has not come up as a continued problem.

UPS has about 275 dedicated planes ranging from Boeing 757s to Jumbo jets.

Billing said his firm had delivered about 160 large freighters to global customers in the past six years.

Grant Bradley travelled to Leipzig courtesy of the ITF.

- NZ Herald

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