New figures indicate that in terms of revenue per miles (RTMs), the US air cargo sector is set to record significant growth throughout the coming two decades. Ignazio Coraci comments.

Brighter prospects

The future is looking fairly bright for the air freight sector. The onset of the global e-commerce market has radically revised the industry’s fortunes. Consumers are now ordering goods online in ever-climbing numbers, often expecting near-instantaneous delivery. Demand for air cargo services, therefore, is spiking, as carriers have the ability to transport goods to consumers via air quickly.

A report conducted by MarketLine, a research firm, indicates that the global air cargo sector is destined to experience strong growth in the next five years. It is expected to record a Compound Annual Growth Rate (CAGR) of 3.6% from 2016 to 2021, a dramatic uplift from the CAGR of 0.7% registered from 2012 to 2016. New research indicates that growth will be particularly strong for carriers who conduct services to and from the US, or domestically within the country, going forward.

According to Air Cargo Week this data was released by the US’ Federal Aviation Administration (FAA). The body recently published its Aerospace Forecast Report Fiscal Years 2017 to 2037 paper, which analysed both domestic and global air freight RTMs. In total, RTMs for the sector dipped by 0.9% in 2016, but are forecast to increase by 1.4% this year, with momentum expected to rise going forward.

Revenue expansion

Explaining, the report stated: “Driven by steady US and world economic growth, total RTMs are projected to increase at an average annual rate of 3.1% for the balance of the forecast period. Following a 1.8% increase in 2016, domestic cargo RTMs are forecast to grow 1.7% in 2017 as the US economic recovery continues. Between 2016 and 2037, domestic cargo RTMs are forecast to increase at an average annual rate of 1.3%. In 2016, all-cargo carriers carried 89.0% of domestic cargo RTMs.”

It also noted that international air cargo RTMs rose by 0.9% in 2015, but dropped by 2.4% last year, due to “slow growth in the US and Europe along with the slowdown in China’s economic growth slowed worldwide trade.” But “growth is expected to turn positive in 2017 to 1.3% as global trade growth resumes. For the forecast period (2017-37) international cargo RTMs are forecast to increase an average of 3.8% a year based on projected growth in world GDP with the Pacific region having the fastest growth, followed by the Other International, Atlantic, and Latin regions, respectively.”

The future looks particularly positive for all-cargo services. According to the FAA, all-cargo’s share of domestic US RTMs should expand to 90.5% between 2017 and 2037, while its share of international RTMs is forecast to increase to 77.1% within the same period, up from 70.8% as of 2016. The FAA also noted that driven by expansion in freight RTMs, the cargo carrier large jet aircraft fleet operating within the US market should grow from 810 aircraft at present, to 1,044 aircraft by 2037.

Facing challenges

Commenting, Ignazio Coraci said: “It is not surprising that total RTMs for US air cargo, domestically and internationally, are set to expand in the next 20 years. It is now very easy for consumers to order goods and they expect speedy service, which air cargo is uniquely suited to provide. As shopping online becomes more popular, this trend could grow, especially in the US, which is both a very consumer hungry market and the world’s largest economy, fuelling demand for efficient air freight services.

“It is important, however, that air cargo carriers which operate within the US market do not rest on their laurels, if they wish to tap into this growth. Consumer expectations are evolving, and firms need to go further to position themselves as trusted providers of first-rate air cargo services. It is critical, for example, for carriers to go paperless, to promote their sustainability credentials to consumers who are becoming increasingly concerned about the effects of paper production on the environment. Only by putting consumers first, will air freight companies benefit from the sector’s potential for growth.”