Airlines will be forced to get creative with their networks as air cargo’s predicted two-year demand growth will create an “unprecedented state”, with limited capacity.
During today’s EU CBEC ecommerce forum at Liege airport, CEO of market intelligence platform Rotate, Ryan Keyrouse, said: “If e-commerce growth continues aggressively, we are going to be in an unprecedented state; the highest two-year growth average we’ve had in recent decades.”
Mr Keyrouse noted that due to air cargo’s eight months of “aggressive growth”, 2024 is “already cooked” to reach 11-12% growth.
And according to data from Rotate, 2025 growth for air cargo is set to see an additional 2 to 7% uptick, putting the industry into “uncharted territory”.
Indeed, in Rotate’s September industry survey of more than 50 industry stakeholders including airlines, forwarders and shippers, 49% of respondents said they expect ecommerce’s aggressive growth to continue.
“That leads to the super obvious question, is it all going to fit?” asked Mr Keyrouse as he warned that demand growth in 2025 “will be limited by the available capacity”.
And while this means airlines will enjoy the benefit of inflated rates, they will also be left with the challenge of catering for the unabating ecommerce demand around the world.
One way to do this is by increasing load factors. However, as noted by Mr Keyrouse, “load factors are already quite full on the key trade lanes”.
Indeed, recent Xeneta data revealed the fronthaul Asia to North America load factor is 87%, Asia-Europe is 86% and Asia-Middle East also at 86%.
Another suggestion is to use more freighters – but “[freighter] aircraft are also flying at their peak – in flight almost full-time”.
Rotate’s live-capacity data for August 2024 showed global B777F fleets operating some 15 block hours per day, just shy of the highest quarter since 2019, while B747-8Fs operate 14 hours per day.
“So, it’s not going to come from load factors and it’s not going to come from fleet utilisation ,” stated Mr Keyrouse.
Further, he noted that projected aircraft deliveries and conversions are only set to add a maximum of 4.4% capacity growth to the market.
“So, the flights are full, utilisation is high and we’re only adding 4.4% capacity. It’s going to be difficult to reach 7-9% next year.
“I’d be super curious where it’s going to come from,” he said.
Mr Keyrouse continued: “It can only really come from one place, and we’ve already seen a couple players in the industry do that, which is start moving capacity.
“Move the capacity from the transatlantic, and put it on the transpacific. It can only really come from there,” he explained.
But whilst this would create a short-term fix to satiate rampant ecommerce demand from Asia, it would exacerbate the already-imbalanced front haul and back haul on Transpacific trades – leading to cost and efficiency concerns.
Indeed, in Rotate’s September survey, a majority of 17 respondents, six of which were airlines, reported “imbalanced flows” as their number one operational ecommerce concern.