Why the air cargo industry must overcome these challenges

posted by Charlie Hart
19 April 2021

The past year has been challenging for the air cargo industry with the Covid pandemic and port disruption leading to increased demand.

According to data from International Air Transport Association (IATA), demand for air cargo was up 9% in February 2021 compared to pre-Covid levels in February 2019.

Willie Walsh, director general at IATA, said: “Air cargo demand is not just recovering from the Covid-19 crisis, it is growing. With demand at 9% above pre-crisis levels, one of the main challenges for air cargo is finding sufficient capacity. This makes cargo yields a bright spot in an otherwise bleak industry situation.”

With demand on the rise, The International Air Cargo Association (TIACA) has identified five key industry priorities that will need to be embraced by the entire supply chain “to modernise and continue to provide enhanced solutions addressing shipper and customer demands”.

Glyn Hughes, TIACA director general, said: “The industry has demonstrated over the last 12 months, how effective it can be when all the supply chain partners unite around a common objective, supporting the global community through the Covid pandemic.

“Our industry came together initially by transporting PPE and other life essentials and then mobilised to provide the only effective transport mode to support global vaccine distribution.”

As new challenges arise, the industry must be “more innovative, agile and focused” to overcome them, it added.

TIACA identified five challenges the air cargo industry must overcome:

1. Digitalisation

Great strides have been made in the last year to harness the power of data to modernise processes and provide transparent services, but the air cargo industry must take this “even further” and all parties should establish and implement digital transformation plans, TIACA said. 

According to EY, the Covid-19 pandemic “exposed long-standing weaknesses in how we make and sell goods”, with the solution being supply chain digitisation and automation.

“The linear global supply chain, designed with little flexibility in mind, has sought to meet consumer demands by lowering cost through scale, minimising delivery time through inventory build-up and logistics capacity expansion, and upholding quality with stringent procurement processes,” it said. 

These approaches however, are “not scalable and run in counter to the flexibility needed for today’s consumers”.

EY identified four key imperatives for supply chain digitisation including intelligence, architecture, operation excellence and planning, and sustainability and resilience. 

2. Sustainability

The air cargo industry must reflect the global society it serves, TIACA said.

“In order to flourish in the years to come, we must create equal opportunities for all, embrace technology and innovation and ensure we implement environmental responsible solutions designed to protect the planet today and for generations to come,” it added.

TIACA’s comments come as environmental lawyers have called for fossil fuel adverts from firms such as ExxonMobil, Shell and Saudi Aramco to be accompanied by “tobacco-style warnings” over concerns that firms are “greenwashing”.

John White, a lawyer at ClientEarth said: “We need to reduce reliance on fossil fuels, but instead of leading a low-carbon transition these companies are putting out advertising which distracts the public and launders their image. Our research shows these adverts are misrepresenting the true nature of companies’ businesses, of their contribution to climate change, and of their transition plans.”

3. Safety and security

TIACA said the protection of the supply chain, its employees and regulatory compliance are “critical components of future industry success”. 

It called on governments to ensure regulations are “relevant and workable”, work with industry in tackling counterfeit and non-compliant shipments, and take appropriate action against those who seek to evade regulations.

According to analysis, in Russia alone various methods of fraud accounted for around 83% of thefts.

TT Club also warned the vaccine supply chain must be “increasingly alert” to threats such as the illegal sale of authentic vaccines and counterfeiting, substitution with fake pharmaceuticals and contamination.

4. Liberalisation

“Fair and liberal” trade policies would ensure the continued growth of the global economy which relies heavily on effective global air cargo networks, TIACA added.

“Supportive trade regulations, coupled with fair and liberalised air and ground regulations will ensure the industry can develop and grow aligned with market needs. We as an industry must come together to ensure our voice is heard to support trade policies that positively impact the global economy.”

5. Partnerships and collaboration

“Success can only be achieved through effective collaboration between supply chain partners, supply chain customers and those who regulate the industry,” it added.

“We as an industry must unite around a common vision for an efficient, effective, sustainable global supply network established through strong community relations.”

 Want to stay up to date with the news? Sign up to our daily bulletin.

CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates