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We are already in challenging times for the international economy. And being a strategic player, the air transport sector is no exception. Since 2020, air carriers have faced all sorts of challenges.
After the pandemic lull, in early 2022 came sanctions and airspace closures as a result of the Russian invasion of Ukraine. This meant significant disruptions to routes. In addition, the price of crude oil saw a huge increase. The immediate effect was an increase in prices that had to be borne by all links in the supply chain, including the end consumer.
On the other hand, the effects of Covid were still being felt strongly in strategic Shanghai and Shenzhen. Some of the most important suppliers to the technology industry suspended operations, further paralysing business and logistics activity.
We also saw a shift from sea to air freight, due to congestion at the ports. This also had an impact on the increase of tariffs in this sector.
2023 seems to hold some more turbulence in store. For the time being, the calm that we had hoped would come in this new year has been a long time coming. Analysts believe, however, that 2023 will be a difficult year, but one in which we will still have some optimistic news.
The international situation
This will be a determining factor in the coming months. The supply chain is going to experience some stresses of various kinds, which will test the foresight and commitment and contingency plans of companies in the sector. It will be another opportunity to take advantage of the situation.
The war in Ukraine is ongoing, and no resolution is expected in the short term. Air restrictions will continue to lead to altered routes, with longer hauls, and the consequent impact on costs.
On energy and oil prices, international analysts have a more optimistic outlook. Benchmark prices are expected to fall during 2023 and 2024, which should have a positive impact on freight rates, as rates are linked to fuel prices.
But the biggest challenge is going to be the evolution of the economy. The news is not very good and ranges from a noticeable retraction in global demand for goods and services to – in the most optimistic forecasts – a recession scenario. This is already making itself felt in companies’ cost containment and will force the sector to face several ups and downs.
Sustainability, new players and drones
The relaxation of restrictions creates a new opportunity in the use of passenger aircraft holds. This will increase cargo capacity at a time when demand is suffering a downturn.
On the other hand, the growing concern for sustainability will force air carriers to undertake a profound transformation of their fleets to align with the commitments made at the various climate conferences. A real example is Japan’s Nippon Cargo Airlines, which has already started to incorporate solutions that reduce emissions by up to 80%.
And finally, it is worth commenting on the advancement of drone technology. US-based MightyFly has already been certified to use vertical take-off and landing (VTOL) drones. It is the start of a trend that will catch on in the medium term, especially in medium range, up to about 600 miles, and in last mile deliveries, which promises to be more environmentally friendly.
Digitisation that does not stop
It is very difficult to accurately predict the impact of AI on the air freight industry. But it is indisputable that digitalisation will continue at a very fast pace in 2023.
In not too long, we will see a revolution, with much more transparent and streamlined shipping processes, immediate and real-time data availability and the development of online portals for quoting, tracking and booking shipments at origin.
It is clear that this digitisation is an unavoidable necessity that will decide who wins or loses in the coming times. Investing in information technology will be essential.
The opportunity to increase presence
Most exporting companies see this as a one-way street and plan to expand their global presence in the coming years. This represents a great opportunity and most likely the diversification of routes.
In this scenario, freight forwarders will have to offer a wider and denser network of correspondents to provide cargo services in increasingly distant airports.
Our commitment
This year will be a decisive one for air cargo and related businesses. Times will be difficult, but there are many opportunities in key areas for the development of the business and its profitability.
At eGlobe, we are committed from the outset to the elements that will make the difference. We are very committed to the use of technology and we are constantly striving to keep pace with the constant advances in this area. When these become industry standards, we will be able to offer perfectly prepared models and processes.
On the other hand, we continue to operate with the confidence that comes from our status as CASS-IATA agents and Authorised Economic Operators (AEO), increasing our network of correspondents and partners at airports and ports around the world, because our goal is to serve our customers wherever their cargo originates or terminates.