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The global transport of goods is a central component of the global economy. Without it, globalization and trade would come to a standstill and the exchange of raw materials, intermediate and final products between countries, regions and continents would be impossible.
In this analysis I present the current situation, analyze connections and venture a look into the future. I will not only look at air freight, but also into freight and goods mobility from a more general perspective, i.e., other modes of transport, as this is important to understand the overall situation.
What freight quantities are transported and how far?
As with passenger mobility, cargo and freight transport can always be assigned to the four major mobility systems (modes of transport): sea freight, road freight, rail freight and air freight. Pipeline transport, which exists for gas and liquid hydrocarbons, is not considered in this text.
For a more detailed analysis, it is important to distinguish between two different parameters. On the one hand, many statistics look at the quantities of goods that are transported, often stated in millions of (metric) tons. If the distance is also considered in addition to the quantity, ton-kilometers (TKM) must be taken into account. 100,000 ton-kilometers are either a hundred tons of freight that are transported over a distance of 1,000 km, but it can also be just 100 tons that travel 10,000 km. If you look at it worldwide, you are usually dealing with billions or even trillions of TKM over the course of a year.
Sea freight accounts for around 80%-90% of global goods traffic. This is at least an estimate from UNCTAD (United Nations Conference on Trade and Development), which publishes various analyses and statistics. UNCTAD publications always point out that there are uncertainties in the published data due to survey deficiencies. In many countries, transport events, in particular on the road, are inadequately recorded and sometimes not recorded at all. Even for rail transport, there are sometimes only figures that have been estimated to a considerable extent because there is a lack of precise data collection and corresponding statistics. The most reliable data is available for freight shipping and air cargo.
For 2021, 11 billion tons of cargo (total goods loaded) are listed as cargo on ships. According to UNCTAD, sea freight volumes have grown by around 31% from 2010 (8.4 billion tons) to 2021, with slight declines during the pandemic earlier this decade.
In astudy conducted by the global logistics service provider DHL from April 2023, a total transport performance of around 60 trillion TKM by sea is assumed for the year 2010, which in return means that each ton of ship freight is transported an average of around 7,150 km, which withstands at least a certain plausibility check. The same source estimates 6.4 trillion TKM for global road freight in 2010, 4.3 trillion TKM for rail freight and 191 billion TKM for air cargo.
Daring outlook for 2050
Even though current figures for the global transport industry are difficult to determine, there are publications that dare to look ahead to 2050.
Forecast of global cargo transport until 2050; source of figures: DHL report
This graph first of all shows that the overall importance of sea freight is unlikely to change in the coming decades. It is interesting to note that similar growth rates are forecast for all four modes of transport. In relative terms, air freight is expected to grow the most, although the absolute figures show that the ton kilometers initially appear negligible compared to all other transport systems, especially sea freight. However, we will see later that this is a fallacy.
In connection with these forecasts, which expect growth of significantly more than 300% for all types of transport within 40 years, the fact that the respective infrastructure of the transport systems must be able to cope with this is particularly interesting and of great importance from a logistics point of view. Each system has its own hub infrastructure where transport processes begin and end (ports, freight and loading centers, train stations, airports), which must be expanded accordingly to be able to cope with the increase in volume.
For the land-based systems of rail and road, there is also a very complex and expensive path infrastructure between the hubs (rail lines, roads), which is not required for aviation and maritime shipping. The air between two airports and the oceans between ports are simply there and do not need to be built and never need any maintenance. Only in inland shipping, which is negligible in terms of volume, is such expenditure sometimes necessary.
It is already evident in many countries that increasing traffic volumes will not be possible on existing roads or railways. The corresponding construction projects are lengthy and are often delayed by years, sometimes decades. Previous projects to shift freight transport on a large scale from road to rail, for example, must be considered unsuccessful in many cases when realistically analyzed, even though billions of dollars of public funding have sometimes been invested in these projects. Meeting the demand of the expected growth in air cargo requires airlines and airports to invest in the necessary infrastructure, but no new streets, highways or railroad tracks are necessary.
Economic importance of cargo and freight transport
If you just look at the figures for the total quantity of goods transported, you might get the impression that air freight has no significance in international goods traffic. However, if you look at what is being transported and what value the goods have, a completely different impression emerges. For Germany, very precise figures on the goods transported and their values have been available for years. According to a recent publication by the Federal Agency for Civic Education (bpb), the volume of goods transported by air freight, based on the weight of all imports and exports, was around 1% in 2022. But this 1% of the volume of goods represents 35% of the value of the goods.
The average freight value per ton in 2022 was just under €153,000 for air cargo, while it was around €6,500 for road freight, around €2,500 for sea freight and just €2,000 for rail.
Average value of freight by means of transport; source of figures: bpb, BDL
Both the average value of air freight and the air freight volume in Germany are increasing overall. Since 2000, the total volume has increased by 54% annually, and the value of goods has increased by 81% in the same period. The export of goods by air freight has been around 60% of the total volume for more than 20 years, and imports accordingly account for around 40%. Imported goods recently had significantly higher values than exported goods. In 2022, it was just under €173,000 per ton for imports and just under €140,000 for exports. There are also considerable differences in the value of goods depending on the region and country. A ton of air cargo from Taiwan had an average value of more than 325,000 euros in 2022, only around 6% of this value was for air freight from Kenya, which, at just over 19,000 euros, was still many times higher than the average value of goods for all other transport systems.
Despite its small volume, air freight plays an important role, especially when high-value or perishable goods need to be transported. Microchips and other high-value electronics from Taiwan, spare parts for machinery all over the world that have to reach the recipient as quickly as possible or flowers from East Africa that many consumers do not want to miss even in the European winter are typical air freight.
For some observers, air freight is actually the backbone of the German export economy. Both the speed and the efficiency with which goods can be delivered to almost any point in the world at short notice play a decisive role here. In none of the three other transport systems are passenger and freight mobility linked as efficiently as in air freight.
Around half of all air cargo worldwide is transported as “belly freight” in the fuselage of passenger aircraft. During the COVID-19 pandemic, this situation led to significant problems with the air freight transport that was still necessary, but most of the passenger traffic did not take place and the passenger aircraft’s cargo capacity was therefore also lacking. In the meantime, air freight is simply loaded back onto many passenger flights depending on the available cargo space, and this trend is increasing. You do not always have to have your own cargo planes to fly air freight; this can be offered efficiently and cost-effectively even on routes where only a small volume of freight needs to be transported.
On the other hand, neither on the road, nor on the rails nor on ships do people and freight travel in the same vehicle on a regular basis these days. Until the 1980s, the Federal Railways in Germany still occasionally had combined train services in which freight wagons were attached to passenger trains. For the past 40 years, however, passenger and freight trains have been strictly separated.
Costs and efficiency of cargo transport
The most surprising finding for me when researching this article was the very low value of the goods, some of which are transported over very long distances. With less than €2,500 per ton in shipping and only around €2,000 by rail, the fundamental question arises as to what the costs of transport are in relation to the value.
It is extremely difficult to make general statements about the costs of the various transport options. In container shipping, the costs are calculated per container, so that in addition to the quantity to be shipped, the volume is also important, and the distance does not play a decisive role. Prices are currently quoted between US$1,500 and US$3,000 for 20- or 40-foot containers in intercontinental transport. For air freight, prices between US$4 and US$8 per kilogram apply for intercontinental transport. For Germany, DB Cargo’s current freight rates are around €202 per ton for rail freight with a payload of up to 21 tons in a freight wagon for a distance of 500 kilometers. For truck traffic in Germany, there is a study from 2022 in which the transport cost share of the product value of transported goods was already determined. Depending on the group of goods transported, the proportions vary considerably; for stones and earth, comparatively cheap products, the transport costs are between 54% and 69%, depending on the distance, for fertilizers between 7% and 16%, and for postal goods between 1% and 4%. However, average statements and cross-system comparisons that include all traffic systems and distances simply cannot be made seriously.
Another important role in efficiency is the extent to which the individual modes of transport are utilized in regular operations. In principle, the utilization of transport vehicles decreases with increasing specialization and with decreasing distance to the end customer. A concrete mixer that transports concrete the last few kilometers to the construction site can only ever be empty on the return trip because it simply cannot take any other goods with it. The same applies to trucks that deliver to supermarkets or other retailers. At best, returns or packaging material that is no longer needed could be loaded. Overall, the utilization of the trucks that roll through Europe every day is often less than 50%. Freight trains with open bulk wagons that are completely empty of freight can also occasionally be observed, for example, when coke or iron ore has been delivered to a steel plant. Here, there is simply nothing that could be taken along on the return journey and transported in the corresponding wagons. Ships, especially container ships and also aircraft, are much more flexible in this regard and, when looked at holistically over certain routes, achieve utilization rates of the offered freight capacity of more than 70%. In addition, the e-commerce activities of Asian providers, who often send parcels addressed to end customers directly from Asia to Europe and the US, are causing additional demand for air freight capacities, which exceed the continuously increasing supply capacities since the pandemic and contribute to the high utilization of the air freight capacities on offer.
Conclusion
Global freight traffic is essential for the economies of all countries trading with one another. Around 100 trillion ton-kilometers of transport are already carried out across all systems every year, primarily on sea-going vessels. Experts expect this to more than triple by 2050. These expected increases represent enormous challenges with regard to the necessary infrastructure, especially for the land-based road and rail systems. Adjustments to the node infrastructure must be made for all systems, but railroad tracks and roads also have to be expanded accordingly for trains and trucks, because in many countries the currently existing infrastructure is hardly able to cope with today’s traffic volumes, and planning and building new infrastructure takes decades. Having this in mind and considering the benefit of air cargo that absolutely no path infrastructure is necessary for aviation, the already forecasted growth until 2050 should make the industry optimistic. Efficient structures as well as continued endeavors towards greater sustainability might even lead to shifting more cargo from other transportation modes into planes.
As always and everywhere, future challenges require answers that do not come from an emotional point of view and do not emphasize our preferred personal ideology. Once again, rationality and an understanding of the mathematical and scientific relationships that underlie all mobility issues are required. The following applies to the transportation of goods worldwide: Mobility is expensive – both economically and ecologically.
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