The Asia-Pacific (APAC) region has long been a driving force in the air cargo industry, fuelled by robust economic growth, expanding consumer markets, and the rise of e-commerce. However, the onset of the Covid-19 pandemic brought unprecedented disruptions, reshaping demand patterns and supply chains worldwide.
During the height of the pandemic, air cargo emerged as a lifeline for essential goods, including medical supplies and perishable goods. This surge in demand, coupled with the grounding of passenger flights, led to a capacity crunch and soaring freight rates across the APAC region.
As economies gradually reopen and trade rebounds, the APAC air cargo market is witnessing a shift in demand dynamics.
Addressing this issue, Mark Sutch, Chief Commercial Officer of IndiGo Airlines, explained that “the cargo business was an ancillary to the IndiGo airlines until Covid-19 hit the globe, which created an opportunity for the carrier to shift its focus to the mainstream cargo business.
“We identified top niche markets and developed them under our cargo business plan. Although we are at the beginning of the journey, we are determined to develop it as the core business pillar of IndiGo.”
Capacity challenges
Despite the rebound in demand, capacity constraints continue to pose challenges for the APAC air cargo market. The prolonged grounding of passenger flights, which typically carry a significant portion of air cargo in the belly hold, has resulted in a persistent shortfall in available capacity.
From the Indian market perspective, Sutch said: “It is an exciting market to be in and has a tremendous potential, however, it needs few things.
“Despite China +1 and Make In India initiatives of the Indian government, India is well behind in cross-border shipments. Although the domestic e-commerce market in India is booming, it’s still lacking behind China, where the cumulative daily e-commerce cargo movement exceeds 10,000 tonnes.
“Furthermore, another exceptional model is Hong Kong, and India can certainly take some notes in beating capacity constraints and boosting cargo volumes.
“Owing to this analysis, India still has a long way to go. It certainly takes advantage of the belly cargo and shall continue, as Indian operators have a cumulative 150 aircraft orders.
“IndiGo alone moves 350,000 metric tonnes of cargo each year and has a prime opportunity in the pharma and perishables cargo movement. With the new aircraft orders, India can certainly add a huge capacity to the market and shall boost its cargo movement.”
While dedicated freighter aircraft have helped mitigate some of these capacity constraints, they alone cannot meet the growing demand for air cargo services. Airlines have been exploring innovative solutions to maximise cargo capacity, including the deployment of passenger aircraft for cargo-only operations and the conversion of passenger aircraft into temporary freighters.
Adding to the topic, Vivian Lau, Chair & Group Chief Executive, Pacific Air Holdings Limited stated that, “Intensity of the focus is to move goods around the globe is prominent.
“Starting in Hong Kong, the carrier made its prime focus on Vietnam with all hands-on deck and made a fruitful journey from that strategic point.
“It is indeed surprising to understand the supply chain of e-commerce and how air cargo has made its dominance in this particular sector of the industry.”
However, these measures have their limitations, and the industry is facing pressure to find sustainable, long-term solutions to address the capacity crunch. Investment in infrastructure, fleet expansion, and collaboration among stakeholders will be crucial in meeting the evolving needs of the APAC market.
Kenneth Chan, Head of Strategy and Business Development at Malaysian Airlines Cargo added: “Although Malaysian Airlines is majority known as the passenger carrier, we have been making strategic restructuring efforts to fit the growing opportunity.
“We currently have Airbus A330 P2Fs deployed across our cargo network and trying to rebalance the cargo flown with the tapped opportunity. We are excited about strategic partnerships within the region as Kuala Lumpur Cargo accounts for 50% of transit cargo connecting across the Southeast Asia region.”
New normal
In response to the challenges posed by the pandemic, stakeholders in the APAC air cargo market have demonstrated resilience and adaptability. Airlines, freight forwarders, airports, and regulatory authorities have collaborated closely to ensure the efficient movement of goods while prioritising safety.
Technological advancements have also played a crucial role in streamlining operations and enhancing efficiency in the air cargo industry. Digital platforms, data analytics and automation technologies have enabled stakeholders to optimise routes, manage inventory, and track shipments in real time, contributing to greater transparency and agility in the supply chain.
Addressing this, Robert Zhang, Commercial Director at SF Airlines, outlined: “Cross-border e-commerce was a game changer, and it will remain the same over the coming decade.
“In 2023, cross-border e-commerce capped at US$50 Billion, spanning across all continents. To tap this extraordinary potential, it is mandatory to have a strategic fleet expansion plan and target to meet the demands.”
Realigning Demand in the Asia-Pacific market
