Air Cargo Market Research Articles

A Comparison of Forecasting Performance of PPML and OLS estimators: The Gravity Model in the Air Cargo Market

A Comparison of Forecasting Performance of PPML and OLS estimators: The Gravity Model in the Air Cargo Market

Solving the mystery of discrepancies and double counting in air cargo through demand and supply big data analysis

This paper estimates and analyses the air cargo demand and supply imbalances between large geographical regions based on newly collected demand and supply data. Due to the need for more data for academics and the industry, and the lesser research interest compared to its passenger counterpart, limited empirical research on air cargo market dynamics has been conducted. Live flight and aircraft data were collected for five consecutive years to reconstruct the air cargo network and capacity. Air cargo sales tonnes data were collected and introduced as these data eliminate double counting of transfer route volumes. Both datasets were used and compared to analyse the air cargo trade imbalances. The major findings indicate an imbalance in demand on most of the 110 studied region pair combinations. The supply data indicate a high imbalance for freighter capacity, a relatively smaller imbalance for integrator capacity and a limited imbalance for the wide-body belly capacity. The data indicate that the Middle East, Northeast Asia, Russia, Central Asia, and Central America regions are all transfer or in-transit regions where a large amount of cargo passes through. However, limited cargo volumes originate or find their final destination here. Although the general assumption indicates that air cargo supply follows air cargo demand, imbalances between demand and supply in opposing directions were found for several region pairs. To the best of our knowledge, this paper is one of the first academic sources to introduce data analysis based on sales tonnes. This research assists academics and the industry in getting a better understanding of the current air cargo market dynamics. It also provides a base to enhance future air cargo market research, analysis and forecasting.

The value of time and the impact on the air freight product portfolio - A study of the South Korean market 2017–2021

Traditionally, time was a crucial factor in determining competitiveness in the air cargo market. This study demonstrates that products whose value changes drastically over time could increase the air transport demand. This study represents that the shipper having products with enormous time sensitivity is more willing to endure the higher fare, indicating the possibility that time-sensitive products will drive the air cargo market's growth. This study also provides empirical evidence for the influence of time factors by showing that time-sensitive products are being transferred from sea to air transport based on ICN and South Korean data. The analysis results are as follows. First, an emerging type of cargo, not a traditional type of cargo, has a significant effect on increasing air transport share. The emerging type of items appeared before Covid-19, and Covid-19 has accelerated their growth. Second, even if airfares increase relatively, the proportion of air transportation does not decrease. It seems to be the result that an emerging type of cargo with higher time sensitivity significantly affects the recent increase in air freight volume. Demand increases in an emerging type of cargo, more sensitive to time, can affect the rise in the air transport share, restricting the negative effect from a relative increase in air freight rates. Last, Covid-19 significantly affects the increase in air transport share. In this regard, this study provides practical implications for the recent growth drivers of the air cargo market. Especially in addition to variables traditionally considered to impact air freight volumes, such as income and price, this study suggests changes in transport items as a growth driver for the recent air cargo market.

The air cargo market overview

Measured by the value of goods, about one-third of all international trade is moved by air. It stands for a big chunk of the transport market and global GDP, playing a crucial role in moving products of high value in relation to their weight, but also the backbone of overnight shipping and enabling e-commerce growth. This places air cargo as very dependent on overall economic deviations. As the world slowly exits the global pandemic state, each part of the aviation industry should be subject to analyses that confirm or contradict previous forecasts, thus helping to make correct business decisions by the relevant entities in the aviation industry. The following article is devoted to the analysis of the air cargo market. As a starting point, the article shows a general overview of the world's economy by pointing out the main variables that impact demand for air cargo and presenting forecasts on some of those. General air cargo market overview is the next subject. This part shows the latest trends connected with the general aviation market and the cargo part, outlining the general look. An overview of forecasts for the aviation market, coming from aircraft manufacturers, is the last of the analytical parts of this article, describing each entity's market outlook. Presented analyses were later used to determine trends most likely to show in coming years. The accurate description of those allowed for creating a coherent forecast of the air cargo market, with the calculation of actual cargo tonne-kilometers for oncoming years using a simple, multivariate forecasting method based on creating a historical data-driven model. The article concludes with a summary that provides an overview of the covered subjects.

After COVID-19: supply chain change

Worldwide indexes confirm supply chain disruptions are ‘historically high’ and as the Economist makes clear ‘uncertainty lies ahead.’ After Covid 19, and now in the context of the war in Ukraine, “disaster” is real. The purpose of this paper is first to identify the levers, the key visible breakdowns in Covid 19 impacted supply chains. Then to identify the fulcra” that maybe “really important and relevant” to supply chain change. Resilience to pandemic breakdown in supply change are considered in five key areas. The resilience of supplier networks has been tested. Despite measured environmental benefits from reduced traffic delivery delays. Despite significant growth in the air cargo market delays are only just past their peak. The resilience of employment is being challenged as greater productivity, happier and health workers and lower emissions has demonstrated the importance of ‘the physical dimension’ of work and opportunities taken to switch occupations.The resilience of the component parts of products and services has become the new watchword as interruptions in the source and supply of critical components has promoted search for substitutes. Reshoring and reinvention identify how bringing back, with innovative technology, a skilled workforce, tax incentives, means improved innovation and product differentiation. The resilience of supply chains to adapt quickly is marked by the prominence of consulting firms who have advanced supply chain monitoring technology and weaponized the supply chain. The trend for economic spheres to develop to insulate companies from geopolitical concerns. There is an ongoing acceleration of slowbalization. The resilience of technology means reshoring of the apparel, food, and beverage industries, among others, is becoming cost-effective. Predictive control strategy, still in its infancy, with modelling and optimization is becoming the work horse for supply chain management. The paper concludes with an assessment of the levers and fulcra for supply change.

Price and Income Elasticity of the Demand in the Inbound Air Cargo Market - the Case of the Incheon International Airport-

Price and Income Elasticity of the Demand in the Inbound Air Cargo Market - the Case of the Incheon International Airport-

PROSPECTS AND PROBLEMS OF ROBOTIC DELIVERY OF THE LAST MILE. THE RELEVANCE OF THE PROBLEM AND THE CONCEPT OF THE SOLUTION. PART I.

The express delivery market in recent years has been growing at the level of 3-4%, and even in these conditions, not only is it not saturated, but the demand for it is growing. According to Oxford Economics, the growth of the air cargo market, which determines the volume of the express delivery market, accelerated at times up to 7% per year from 2013 to 2018 [1].
 The biggest changes took place in 2016-17 due to a technological breakthrough in the field of logistics with the introduction of services such as drone delivery, processing orders on the blockchain, calculation of the delivery mode using artificial intelligence, etc. It was expected that due to the growing demand on fast delivery guaranteed, the number of express delivery employees worldwide will grow to 4.5 million over the next few years. But the coronavirus pandemic has accelerated this process.
 In the study “The Future of Freight Transportation. How new technologies and new thinking can change the movement of goods”, presented by the international network of consulting companies Deloitte in 2017, states that carriers have already solved many of the problems associated with the transportation of goods. But the “last mile delivery” stage has remained limiting the development of the delivery service. At this stage, companies suffer losses due to the concentration of logistics, algorithmic and kinematic tasks that cannot be automated with modern means and technologies for replacing human labor.
 Consequently, the use of alternative, unconventional technologies at this stage is a key condition for the mass development of delivery.

ЕКОНОМІЧНІ МЕХАНІЗМИ РЕГУЛЮВАННЯ РОЗВИТКУ ІНСТИТУЦІОНАЛЬНИХ ФОРМ ОРГАНІЗАЦІЇ ВАНТАЖНОГО АВІАЦІЙНОГО ТРАНСПОРТУ

The article shows the strategic role of cargo air transport in the economies of the world, related to the maintenance of foreign trade, urgent delivery of goods, their transportation over long distances, and so on. The determining factors of the development of cargo air transport in the global economy are systematized: organizational innovations, information technologies, new forms of cooperation of air carriers and logistics solutions. The contribution of air transport to the formation of cargo turnover in Ukraine is determined. The opposite dynamics of volumes of cargo transportation by air and other types of transport is revealed. The contradiction between the low share of air cargo traffic and their strong absolute and structural growth is quantitatively shown. Air freight is defined by a market of oligopolistic competition due to a limited number of economic entities, the dominance of one large and several medium-sized players, the presence of barriers to entry, which are financial-investment and technical-technological nature. The attractiveness of the air freight market for investments is shown given the predominant positivity of financial results and the growing share of profitable enterprises. The institutional forms of organization of cargo air carriers (classic, combined, hybrid) are generalized, their advantages and disadvantages are defined. The principles of functioning of transport chains and realization of multimodal transportations on the basis of cargo air transport are substantiated. The main information systems of booking and management of air cargo transportation, distribution, pricing, calculations, tracking of luggage by buyers and sellers are characterized. The requirements of the International Air Transport Association for the use of innovative e-freight technologies in aviation are summarized, recommendations for joining the subjects of the domestic air cargo market in terms of electronic document management and simplification of customs procedures are developed. The improvement of economic mechanisms of development of cargo air transport in Ukraine on the basis of special economic zones of port type is offered.

Investigating Paradigm Shift from Price to Value in the Air Cargo Market

This study presents a paradigm shift in the air cargo market based on Korea and Incheon Airport’s empirical data. The air cargo market has traditionally handled expensive items and has been a supplier-oriented market. There has been little room for individual customers in this market. However, “value” gradually replaces “price” in this market. The value depending on consumer preferences significantly impact air cargo demand. Consequently, items transported by air cargo are changing, and airlines and other market participants are revising operation policy. Economic growth may be losing its dominant power as the main growth engine in the air cargo market. This study identifies the weakened link between air cargo increase and economic growth based on the Granger causality test. COVID-19 calls for a deeper understanding of the paradigm shift in the market for sustainable air transport because COVID-19 will further stimulate it. In this regard, the air cargo business, which maintains a stable trend even during COVID-19, is seen as a new opportunity for the aviation industry. Since sustainable air transport requires an accurate understanding of the paradigm shift in the air cargo market, this study enhances our knowledge of the paradigm shift and provides significant implications for sustainable air transport.

Analysis and Prospect of Export Trend of Air Cargo Market before and after COVID-19

Recently, the aviation industry faced a major crisis due to the impact of COVID-19. However, despite the sluggish passenger transportation, the cargo transportation sector is relatively maintained or increasing depending on the item. In this study, we will look at the trends before and after COVID-19, focusing on the cargo export field, which is a concern of the aviation industry. First, it analyzes the entire air cargo and then analyzes the trends of each item and country in detail. In particular, it examines the process of changes in air transport costs, which increased significantly immediately after COVID-19, and conducts future trends and prospects in the cargo export field. As a result of the study, some characteristics of air cargo exports before and after COVID-19 were found in an analysis by item and country, and transportation costs varied according to route distance.

The Impact of the Corona Virus Disease 2019 on China’s External Transportation Industry

In order to study the impact of the Corona Virus Disease 2019 epidemic on China's foreign transportation industry, this article summarizes the impact of a sudden major epidemic on trade and transportation, and applies statistical data trend analysis, case analysis, graphic analysis, and comparative analysis. The preliminary research on the Corona Virus Disease 2019 epidemic in the external transportation industry such as ports, shipping and civil aviation. The conclusion of the study is that the Corona Virus Disease 2019 epidemic has concentrated on industries such as ports, shipping, and civil aviation. It is expected that the volume of containers in major coastal ports will decline by more than 20% in March. 30%. Before and after the Spring Festival, the number of international routes decreased by 19, and the number of flights and seats decreased by 28%. The air cargo market was affected by the epidemic. As the epidemic situation is controlled in the short term, production will gradually recover. Correspondingly, countermeasures should be taken to stabilize foreign trade, stabilize production, stabilize channels, and stabilize investment to turn dangers into opportunities and minimize negative impacts. This research will provide a reference for the industry to scientifically respond to the Corona Virus Disease 2019 epidemic.

항공화물 인프라 개발과 가치 사슬에 대한 연구

Airports have formed air cargo value chain by focusing on airlines and freighters to provide relevant services. However, the rise of air cargo shipping through belly space of passengers and the emergence of e-commerce freight bring up necessity of new airport infrastructure and process to satisfy the needs from direct suppliers and consumers in air cargo market. This study shows airport as an active facilitator by presenting specific airport infrastructures and processes that reflect the changes in the external environment of air cargo transportation at Incheon Airport and the global air cargo market trends. In addition, this suggests sustainable airport to expand air cargo value chain and increase involvement in the global value chain through the new air cargo infrastructure.

Развитие труднодоступных регионов Севера, Сибири и «подрывные» технологии беспилотной авиации

The air cargo market is developing rapidly both in Russia and around the world. The use of unmanned aerial vehicles with vertical take-off and landing without an aerodrome base is becoming a promising area for air transportation of goods in remote regions. Companies around the world are intensively developing various types of unmanned aerial vehicles that are potentially capable to carry out cargo transportation. There are objective and subjective issues of their use that have to be solved at present. Russian developers offer promising innovative solutions that can have export potential, expand the range and areas of their application, and may be attractive for investment. Transportation of goods with the help of UAVs is expected to be cost-effective, which should result in business development, should increase jobs, strengthen the economy and infrastructure of hard-to-reach regions.

Analysis of the current situation and development trend of the international cargo UAVs market

The article presents analysis of the current situation and development trends of the international UAVs cargo market. It is shown that the UAVs market has made a transition from a stage of studying technologies to commercial operation and implementation of finished products. Nowadays it is at the stage of rapid growth. However, a global market for cargo UAVs and commercial services on their basis for transporting bulky goods is still at the early stage of commercial development. At the same time, the trend for the development of cargo UAVs with the large carrying capacity corresponds to the analysis results of the global air cargo market.

Development of a Cost Forecasting Model for Air Cargo Service Delay Due to Low Visibility

The air cargo market is growing due to the spread of information technology (IT) products, the expansion of e-commerce, and high value-added products. Weather deterioration is one factor with a substantial impact on cargo transportation. If the arrival of cargo is delayed, supply chain delays occur. Because delays are directly linked to costs, companies need precise predictions of cargo transportation. This study develops a forecasting model to predict delay times and costs caused by the delayed arrival of cargo due to severe weather in the air cargo service environment. A seasonal autoregressive integrated moving average (SARIMA) model is developed and analyzed to address delay reductions in cargo transportation. Necessary data are identified and collected using time series data provided by Incheon International Airport Corporation, with an emphasis on monthly data on cargo throughput at Incheon International Airport from January 2009 to December 2016. The model makes forecasts for further analysis. The model stands to provide decision makers with strategic and sustainable insights for cargo transportation planning and other similar applications.

Кто возьмет попутный груз? Исследование рынка грузовых услуг российских пассажирских авиакомпаний

<span>Статья посвящена выявлению общих закономерностей рынка грузовых авиаперевозок, выполняемых на пассажирских рейсах, а также его российских особенностей. Главная цель работы заключалась в выделении из общей структуры рынка грузовых авиаперевозок сегмента попутных грузоперевозок на пассажирских авиарейсах и исследовании их качественных и количественных характеристик. На основе данных отраслевой статистики авторы сегментировали рынок попутных авиагрузов по ряду критериев: типу рыночной структуры и используемых воздушных судов, совокупной величине спроса на грузовую емкость, географическим особенностям рейсов, выполняемым в РФ, а также проанализировали взаимодействие участников этого рынка. С учетом отраслевых особенностей, влияющих на интерпретацию статистических данных, проведена оценка грузового потенциала и структуры российского рынка авиагрузовых услуг. В работе показано наличие количественной и качественной взаимосвязи между пассажирской и грузовой составляющими регулярных пассажирских рейсов, а также влияние на грузовой потенциал пассажирской авиакомпании наличия/отсутствия в ее парке широкофюзеляжных судов; обозначена недостаточно эффективная работа по загрузке пассажирских рейсов попутными грузами у большинства российских авиаперевозчиков.</span>

A Strategic Analysis of Cargolux Airlines International Position in the Global Air Cargo Supply Chain Using Porter’s Five Forces Model

The objective of this research was to examine Cargolux Airlines International’s, one of the world’s major dedicated all-cargo airlines, strategic position in the global air cargo supply chain. To achieve this objective, a qualitative research approach was used. The data gathered for the study was examined by document analysis. The strategic analysis of Cargolux Airlines International was underpinned using Porter’s Five Forces Model. The study found that Cargolux has developed an extensive portfolio of products that satisfy discrete air cargo market segments’ requirements. The airline has also entered strategic partnership agreements with Emirates SkyCargo, Nippon Cargo Airlines (NCA), and Oman Air, which has enabled the partners to expand their route networks and to better optimize their available air cargo capacities. Cargolux has also established Milan-based Cargo Italia, which focuses on serving the important Italian air cargo market. The airline has also developed a successful two hub strategy in conjunction with one of its major shareholders, Henan Civil Aviation and Investment Company (HNCA). In 2017, Cargolux commenced a journey of transformation with the introduction of the “Cargolux 2025 Strategy”. A limitation of the study was that Cargolux’s annual revenues were not available. It was, therefore, not possible to analyze the airline’s revenue performance.

Strategic entry to regional air cargo market under joint competition of demand and promised delivery time

In air cargo industry, mainline carrying and regional carrying are complementary services that form an air cargo service supply chain. Recently, many mainline carriers (MCs) have strategically entered upstream regional carrying service market to offer “one-stop-delivery” service and hence, competed with incumbent regional carriers (RCs). Note that promised delivery time (PDT) competition is essential and common in this industry. We study a MC's entry decision using a joint demand and PDT competition model. We investigate the entry mode issue (fully-controlled or joint-venture), which influences the equilibrium profits and channel structure, and characterize the value of upstream competition and vertical cooperation between the MC and incumbent RC. Interestingly, we find that the MC's upstream entry can result in a win-win situation, or a lose-lose situation for the MC and the incumbent RC. Comparing parties’ profits with and without PDT competition, we find that multi-dimensional competition may weaken the negative effect of upstream entry on the incumbent RC, resulting in a price advantage and PDT disadvantage for the MC. We also find that a fully-controlled entry mode is always a dominant strategy with or without PDT competition. Moreover, by assuming power distribution of the PDT, we find that the increase in service rate can result in a lower price and shorter PDT quotation for the MC. A(n) decrease (increase) of service rate strengthens (weakens) the PDT disadvantage, and this effect is strengthened with fully-controlled entry mode. We also examine Bertrand models and characterize the entry effects and the MC's entry decisions under joint price and PDT competition.

Forecast on Development of China’s Air Cargo Market

With the development of economic globalization in the past 40 years, the global air cargo industry has been maintaining a stable growth of air cargo traffic CAGR (compound average growth rate) of 4.5% and an air cargo turnover AAGR (average annual growth rate) of 6.1%. As a result of economic depression after the financial crisis in 2008, the revenue from global air cargo industry has not registered marked increases and China’s air cargo market has declined as well. However, a significant growth in China’s air cargo has appeared in these two years, driven by the development of cross-border e-commerce and air express. As of 2015, the air cargo turnover increased at a rate of 10.2% to 20.7 billion ton kilometers and the scale of China's freighter fleet has increased to 122. It is predictable that China’s air cargo turnover will remain a sustainable growth. Till the year of 2025, the scale of freighter fleet in China's civil aviation industry is expected to reach 250.

The underlying drivers and future development of air cargo

Air cargo plays a crucial role in the air transport chain and in the globalized economy. As for other modes of transport, the demand for air cargo is a derived demand. Previous studies showed that the main determinants of air cargo demand are merchandise trade and the share of manufactures in merchandise trade. This paper aims to fill a gap in the existing literature by additionally taking the influence of air freight yields and oil prices into account when modelling the global air cargo development. Furthermore, it provides an insight into the future development of air cargo. Forecasts until 2023 are made based on a number of scenarios for the main determinants of air cargo demand. Moreover, an insight is provided into the current air cargo market, including traffic levels and different types of actors and traffic flows. The results are useful not only for academics but also for industry stakeholders for which air cargo is an important contributor to profit and/or cash levels.