Air Cargo World Trends 

International and National Markets

The international market trends tend to fluctuate as it can be observed in the continent and locally. The international economy as part of the globalization phenomena strongly impact air cargo movements as indicated in Exhibit 1-1: It is further illustrated on a Continental basis with the African Continent with low figures of 6% of the global market. In the continent, South Africa has the largest share of air cargo traffic (Exhibit 1-3). The future expectations and trends could provide a more clear vision for the future of South Africa’s air traffic.   

International market

The world economy and world air cargo developments are inseparable. There is a strong positive correlation between air cargo traffic and the Gross Domestic Product (GDP). The resulting demand for transportation services provides opportunities for air cargo growth. The dynamic nature of air cargo traffic is demonstrated by differences in average annual growth. For more than three decades, air cargo traffic has expanded about 7% annually or more than 2.3 times faster than the rate of GDP growth.  

Exhibit 1-1:  World scheduled air freight growth 

In 2003, international air freight traffic increased by 3.9%. The growth of the last decades is indicated in Exhibit 1-2.  

Exhibit 1-2:  World air cargo traffic forecast 

World air cargo traffic will expand at an average annual rate of 6.2% as demonstrated in Exhibit 1-2 for the next two decades, tripling over current traffic levels, as expected by Boeing (GDP growth 3%). The cargo capacity will increase similarly as well, but the fleet size will probably only double, because medium and wide body aircraft will serve the market increasingly (44% to 60%) instead of narrow body aircrafts. The airmail growth is expected to be 2.9% annually. 

Continental market

The major players in the field are the USA, Asia and Pacific area, with Japan and China with the largest import and export figures. The continent Africa accounts for approximately 3.4% of the world’s air cargo traffic in tonnage and 4.4% in tonne-kilometres. Main constraints in this continent are regional conflicts, inter-ethnic violence and the large influence of AIDS that take a toll on many national economic development efforts. The GDP growth is expected to be 3.7%. Europe is the main leading international market partner in Africa, representing 70% of the air trade. The expectations are that air cargo import between Africa and Europe will expand by 5.3% and  export by 5.1% annually. This number is below the worldwide expectation of 6.3%.  

Exhibit 1-3:  African air cargo share separation 

National market 

South Africa is the leading air cargo country within Africa, representing a share of 26% in the air cargo traffic (Exhibit 1-3). The national economy is expected to expand by nearly 4.0% per annum. The main advantage of manufacturing in South Africa is due to the relatively low manufacturing costs. Large European car manufactures are stationed in South Africa and have a great impact on the cargo industry. Approximately 552 000 ton of cargo is moved by air-freight each year. This is done by scheduled passenger services (between 80 and 90%) as well as by scheduled and unscheduled air freighter services. By contrast, in other countries, the split between belly freight and dedicated freighter aircraft is roughly 50%.  

South African air exports tend to be dominated by perishables and high value items such as diamonds to Europe and the Middle East, while air imports into the region tend to be electronic goods and specialist components . Increasing imports and exports of high value specialist components such as goods for the automotive sector is beginning to dominate this market. JIA is a rapidly growing cargo hub, handling 7 times more air cargo than Cape Town International Airport (CIA). It is expected that JIA is going to be the fastest growing airport in South Africa, putting a lot of pressure on the air-freight infrastructure.  

Europe accounts for 70% of all South African foreign air trade. This dominant market share is due to Europe's proximity to Africa and long-standing historical and investment ties, many of which date from the colonial era. The Middle East, North America, and Asia provide 12.0%, 8.0%, and 3.0% of total regional air trade, respectively.  

Exhibit 1-4:  2003 air trade partner overview 

The total annual volume of air trade with Europe in this regional market has expanded 35% from 186,000 tonnes in 1991 to more than 251 thousand tonnes in 2001. While this region once held parity in northbound and southbound tonnages, the market between these two regions is now imbalanced as African air exports exceed air imports in total tonnage by approximately 4 to 3. The exports to Europe primarily consist of perishables (fruits, vegetables, cut flowers, and fish, in particular), apparel, textiles and fabrics, and express documents.  

SAA cargo indicates a current growth of 6.2 to 6.8% annually, and expects this percentage will rise in the future. In general, the future of air cargo will increase at a higher rate than passenger volume. Cargo revenue represents, on average, 15% of total traffic revenue. At SAA (passenger service), 9% of the total revenue is represented by cargo activities, which is significantly lower. ‘The national freight logistic strategy’ study executed by the Department of Roads and Transport has a couple of additions on this statistic which should be taken in consideration: 

-                International operators are often able to charge less than local operators for services to and from Europe as they exploit a ‘paid for’ empty leg; 

-                Low return on investments in freight handling infrastructure at airports at existing hubs and feeder airports discourages investments in freight facilities; 

-                Freight operators registered in other African countries tend to have lower cost infrastructure than South African operators due to the weaker enforcement of safety regulation and levies charged; 

-                Lack of scheduled freighter capacity on North/South route due to lack of consistent demand from SA market. 

a.     What makes Airfreight Unique?

Air freight is the fastest way to transport high-value, sensitive cargo between two long-distances. On short distances air freight would not work because of the various parties involved in the air transport chain. Given that there are multiple parties, i.e. the supply-chain is likely to involve: the cargo owner; the loader (customs), the shipping agent and the ground handler; this can form bottlenecks which delay the transport time. The advantages of modern “integrators” (vertical and horizontal integrators), is that they can efficiently deliver air cargo directly to the shipper, thereby eliminating some bottlenecks. Two product-types are characterised for Air freight status, namely: 

a.             Perishables 

a.     Technical or physical perishables (unprinted photo’s, flowers, fruit); 

b.     Economical perishables (newspapers, fashion products); 

c.     Financial perishables (electronic equipment, pharmaceutical products, minerals such as diamonds, platinum). 

b.             Emergency goods 

a.     Air cargo (planned cargo, like post, Charity/Food or Medical Aid); 

b.     Incidental (specimen).  

Influences in air cargo are not only mass, but the dimensions of the product. For an example, transporting a complete auto unit is neither cost nor space effective as flight deals with a large volume of unused space between the car and the aircraft’s body. An efficient model is to use various packages and consolidate them into a pallet that meets the aircraft maximum dimensions (Exhibit 1-5). Another form of transporting cargo is by using Unit Load Devices (ULD), good example is TEU, basic standardized unit of 20 foot container load; 45 foot or 60 foot Container Load. Further, this standardization of dimensions makes it easy to load and unload the aircraft. The cargo capacity of an airport is released in tonnes and sometimes in cubic metres, but any measure as long as it is substantiated and accepted as unit measure can be use, i.e. kilograms, etc.   

Secondly, the demand in air cargo makes it a convenient mode of transport that requires a platform of which airlines use to off-set economies of scale.  The revenues generated from air cargo are increasing and some passenger airlines earn half or even a larger percentage of revenue out of air cargo.  

Exhibit 1-5:  Sample of Pallets ready for Air Transport – ACSA 2006 

Thirdly, airports are platforms willing and ready to facilitate this revenue generating operation. “The main sources of income of the airport are landing and passenger fees. Retail and land hire also have a positive impact on the airport. Building a cargo hub often results in the attraction of new businesses, like freight forwarders, cargo handlers and consolidators.” The best outcome is the consolidation and spatial location for logistics industries in proximity to the “freight centre” in forms of warehousing; supportive industries, etc. Off course the aircraft parking and landing fees have a positive impact as well.     

Lastly; airports have to quantify air cargo operations using a variety of measures. A key measure is always the volumes expected or moving through the local or regional market to justify and inform the facilities and services. When enough demand is confirmed, the infrastructure must allow large volumes of traffic. The cargo terrain should have enough space to park the trucks and stock supplies in the warehouse. Finally, airport facilities should allow a cargo handling operation, by integrating customs, provide easy access to the aircraft parking ramp and sufficient space to load and unload the aircraft. To operate international traffic, the airport needs an international license recognized by the South African Civil Aviation Authority and the Department of Roads and Transport. The landing strip should be able to carry heavy aircrafts; a long and strong run-way is required.