As the ground begins to settle and we get into the rhythm of 2021, we are able to reflect on the sheer volume of forced evolution which has been thrust onto the air cargo industry over the last 12 months.
Air Cargo News have shared some positive insights this month, reporting statistics from IATA demonstrating that air cargo volumes in January 2021 were up 1.1% in comparison to 2019 levels, and up 6.1% year on year. While these statistics may give us cause to take a much needed a sigh of relief, here at AEROTUF we took a moment to consider the observations, thoughts and trends currently surrounding the air cargo market after a momentous year of change.
The 767 ‘Renaissance’ – Old Dog, New Tricks…
“Age is no guarantee of efficiency”
“And youth is no guarantee of innovation”
James Bond and Q meet for the first time at The National Portrait Gallery, London
Now, a James Bond film may seem to be a strange source to quote from, especially in relation to the air cargo market. However, in this seminal cinematic moment displays when youth and innovation meets age and experience for the first time, both parties verbally joust to challenge each other’s place in the world. Eventually both parties respect just how effective they can be within the ecosystem they co-exist in, regardless of the initial opinion they had of one another.
Whilst many of us may have felt that the sun may have been setting on an ‘old dog’ with the Boeing 767, there has been cause to pause, re-evaluate and look to where age and experience can be repurposed to serve a crucial purpose in a trusted, reliable manor to provide ‘new tricks’. After all, if one of the great supply chain disruptors and innovators of our age, Amazon, are now furthering their adoption and converting the Boeing 767, shouldn’t this give us all reason to re-evaluate how familiar and trusted formats across the air cargo spectrum, can be reengineered and reimagined to deliver value? Amazon are not alone in their acquisition, conversion of these aircrafts which have been retired by passenger airlines is only the beginning.
P2F Conversion Business Is Booming: ULDs Can Be The Same
Airlines that once placed the passenger experience front and centre of their strategy now share LinkedIn updates on the depth, breadth and flexibility of their cargo network. This was once an ‘additional’ service which depended truly on passenger volume and profitability, before a single kilo of cargo came into the calculation.
P2F conversion deliveries in 2021 are up nearly 35% YoY. Is this sustainable? The Loadstar reported in January that whilst freighter retirements over the last 15 years averaged 85 per year, in 2020 this dropped to 17 for the year [The Loadstar, 2021]. Could we see this at equally low levels in 2021? Only time will tell, however as well as all true innovation, in times of need, the airline market is also utilising the ‘familiar’ to keep the market moving.
We see this approach also being applicable to the ULD market. By this we mean there is huge opportunity in adopting a solution in a format we know and trust, then adding some enhancements to the point where it can generate revenue and value for an airline and its customers, rather than be viewed as a simple depreciating asset. This is a trend we see continuing to grow in 2021 and beyond.
We will be monitoring how this shift is impacted as passenger numbers increase, and with it the belly capacity that accompanies this.
The Air Cargo Perishables Market Isn’t Standing Still, Neither Is It’s Innovation
Whether it be life-protecting, improving or enhancing pharmaceutical and healthcare products, or fresh fruits and berries that have given us healthier food choices throughout the seasons, these perishable goods and the Global nature of the demand for them has kept the air cargo market, and by extension many airlines, afloat in the last 12 months. The perishables market is also vital to many national economies, given their reliance on specialty foods such as New Zealand salmon, fruits and vegetables from many Latin American countries, Swiss chocolates and French wines to name a few. Some work which AEROTUF has completed over the years to support this critical market can be seen in this video we produced with Air New Zealand.
Such demand has meant that innovation in this area of the market has not been allowed to stand still. For example, the Pegasus container from Sonoco ThermoSafe is the first specifically designed passive ULD to control the temperature of pharmaceutical and healthcare products in airfreight movements. This has also been coupled with and advanced telemetry system for full track, trace and temperature data that can be linked to in-house systems
The chassis the Pegasus originates from, the AeroTHERM [see more here] from AEROTUF, is a thermally insulated ULD that protects fruits, vegetables, fish, meat and other valued perishable commodities from extremes of heat and cold whilst at cross dock points in the airfreight supply chain. Adopted by several airlines in recent years, the AeroTHERM also offers operational flexibility as it can also be repositioned with baggage and general cargo.
These containers operate at both ends of the temperature continuum, providing either protection from peaks (AeroTHERM), or full control and traceability for what is considered to be the worlds most highly valued cargo (Pegasus).
Buying Behavior Is Being Influenced In New Ways
At either end of the consumer perishables supply chains, both growers and consumers are demanding fresher products with longer shelf lives.
Growers, in particular, are beginning to seek supply chain options which enhance the shelf life of the goods they sell to supermarkets, so that their goods will ‘fly off of shelves’ due to their attractive, premium condition. In addition to this, consumers are asking questions and making buying decisions based on the how sustainable the supply chain is for the food that is heading for their fork.
If a consumer knew that the berry they were about to eat came wrapped on a pallet with up to 30kg of single use plastic, would they prefer to buy an alternative that reduced its burden on the environment? We believe they would, and we believe this demand is already sparking change in buyer behavior and therefore perishable shipping methods are filtering through to the consciousness of the consumer.
Sustainability: Long Desired, Costly, Yet Widely Demanded
It could be argued that ‘green’ is the most expensive colour, but sustainability is a Global issue which needs addressing at every level of society and commerce.
From having perishable shipping methods which reduce single use plastics to thermally insulated, Performance Driven ULD’s which are made from innovative materials, such advancements mirror the same drive for environmentally friendlier, newer aircrafts which are ushering out the less efficient aircrafts like 767’s from passenger airlines and into freighter markets.
At AEROTUF, we see the ULD as a cargo vehicle, similar to an airplane, so we adopted the principle that we need to ensure our vehicle do more (thermally insulated, light, advanced materials) with less (applied material science in design to remove single-use plastics, minimizing handling and greater operational efficiency).
Much like the last 12 months, as you can see from this discussion there’s more industry change coming. However, this time, we are in the driving seat. There has been an unprecedented amount of uncontrollable change, yet we are now on the cusp of positive change. As we know, out of forced evolution, comes growth. The aforementioned industry ‘trends’ are only the beginning. Here at AEROTUF we are determined to move ahead of the tide and continue to innovate, adapt, learn and grow in order to provide the best, Performance Driven ULD solutions for our customers. We remain faithful to our solid roots, whilst responding to what the market needs, and we are very excited to be on this journey of innovation with our partners. As the year continues, we will report back on our predictions and observations, following the tide closely for the positive waves the market is about to make.