What lies in store for air cargo in 2020?
In recent times, there have been several setbacks, twists and turns that have posed challenges to the air cargo industry. India Cargo Award winners talk about opportunities to look forward to in 2020.
Face of the Future
(2018)
SA CONSULTANTS & FORWARDERS
Digitisation and globalisation: More airlines and IATA freight forwarders are getting into multilateral IATA e-AWB 360 programme and moving towards paperless transactions. Digital portals and platforms in web and mobile App versions integrating the supply chain is making air freight forwarding equally handy as its closest counterparts – air travel. We can look forward to digital integration of stakeholders with single-window solutions for smoother and hassle-free movement of trade. Also, new entrants coming into the fray in the form of startups are making endeavours in linking the various stakeholders of the air cargo ecosystem. The entry of Machine Learning, Artificial Intelligence and Internet of Things has the potential to make air freight forwarding cheaper, safer and simpler. We can see blockchain technology coming into existence, providing utmost transparency and visibility of air cargo.
Effective warehousing solutions: The global investment for warehousing is estimated at approximately US$ 10 billion in the next four to five years. We can see a jump-start to the initiative and further progress in the year 2020, thereby improving the supply chain network, which will subsequently increase air freight.
Government policies: We can see that GST has already brought in changes in movement of goods across India, improving connectivity and reducing dwell times at state-borders. The relaxation in FDI policies is another aspect that will open more avenues for enhancing trade. The government is also expected to implement the National Air Cargo Policy (NACP).
Launch of new airlines: The sad closure of Jet Airways has opened many vacant slots in all domestic and international airports across India. The AAI and DGCA are permitting foreign carriers to avail the slots and operate flights and freighters. We have seen freighter carriers getting slots and starting operations in 2019, other carriers like Nokscoot, Vietjet have also started their operations. We can expect more capacity enhancement at major Indian airports, thereby opening more gateways for international trade through air freight.
Ashish Asaf, MD & CEO, SA Consultants & Forwarders
There may not be a peak season: For airfreight, by August-September, shipping begins to ramp up, while the October-November period represents the peak shipping season. Demand for shipping begins to tail off by the latter part of November and into December. But, 2019 was different. Airfreight volumes started increasing in mid-July.
Freight rates will remain flat: Shippers searching for opportunities to use up some of the extra airfreight capacity on the market could see good rates for those loads in 2020. And, while airfreight will continue to be more expensive than ocean freight, existing rates could push companies to explore the latter as a shipping option.
Trade wars continue to impact market: If the political situation does continue as it is right now, it will prove to be a dampener for trade and therefore, airfreight. However, if agreements are put in place and the issues begin to get resolved, then we may see a reverse effect.
A hard Brexit could create new challenges: As we move into 2020, overall market capacity will ebb and flow along with demand – just as it would during any other year. Whether Britain agrees on a “soft Brexit” or a “hard Brexit” could impact that scenario. If there’s a hard Brexit, we could run into a challenging scenario.
Those moving production out of China, watch for bottlenecks:
Shippers need to keep an eye on capacity, bottlenecks and rates, all of which could impact their airfreight planning and budgeting in the coming year.
Best Ocean Freight Forwarding Company (2018)
Emerging Logistics Company (2015)
India’s air cargo sector has scaled to a level where it attracts more and more international cargo operators. The airfreight services market analysis considers sales from manufacturing, retail and pharma, and other end-user industries. In 2020, the pharma industry is evaluating the numerous opportunities to speed-up product lifecycles and bring further efficiencies to drug discovery, development, manufacturing and ultimately, commercialisation. The manufacturing segment had a significant market share, and this trend is expected to continue over the forecast period. Factors such as increasing food and beverage production and growing exports will play a significant role in the manufacturing segment to maintain its market position. Despite being a costlier mode of transportation, the increasing demand for perishables, chemicals, and valuables, as well as the rising demand for just-in-time production of goods, has created a massive demand for air freight services.
Sarini Sachdeva, CEO, Aardour Worldwide Logistics