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By Glyn Hughes, director general, The International Air Cargo Association (TIACA)
International trade has long been a catalyst for economic growth, innovation, and global cooperation. By enabling countries to specialise in the production of goods and services in which they hold a comparative advantage, trade enhances efficiency, lowers consumer prices, and increases the variety of available products.
The air cargo industry, as a vital enabler of international trade, plays a pivotal role in connecting markets, ensuring the rapid transport of high-value and time-sensitive goods, and supporting global supply chains.
Benefits of international trade
The foremost benefit of international trade lies in economic growth. Nations engaging in trade experience increased gross domestic product (GDP) as exports drive production and employment. Trade also facilitates access to foreign investment, encourages technological advancement through competition, and enables knowledge transfer between countries.
Moreover, international trade empowers businesses – particularly small and medium-sized enterprises (SMEs) – to reach global markets and diversify their customer bases.
The success of the global economy in terms of enhancing global prosperity can was clearly demonstrated in a World Bank study which illustrated that since the early 1990s, over 1.0 billion people have been lifted out of extreme poverty due to economic activity expansion.
From a consumer standpoint, trade lowers the cost of goods and services by creating competitive markets and offering alternatives. It also improves product quality and innovation as businesses must meet international standards and cater to diverse preferences. Furthermore, trade enhances diplomatic relationships between nations by fostering economic interdependence, which can act as a stabilising force in geopolitics.
It is therefore crucial for economic and political stability that the delicate balance of economic interdependency is maintained and that the potential fallout from the current protectionist measures being implemented could be catastrophic.
“The air cargo sector is integral to the functioning of international trade, particularly for the shipment of perishable, high-value, or urgent goods.”
The role and importance of the air cargo industry
The air cargo sector is integral to the functioning of international trade, particularly for the shipment of perishable, high-value, or urgent goods. Pharmaceuticals, electronics, automotive components, and fashion products rely heavily on air transport due to its speed and reliability. Air cargo contributes to global GDP by supporting just-in-time production processes and enabling the expansion of e-commerce.
Despite representing less than 1% of global trade by volume, air cargo accounts for over 35% of trade by value. Its strategic importance has only grown in recent years, as globalisation and digitalisation have increased demand for fast and efficient logistics solutions.
Trends in the air cargo industry
Several trends are reshaping the air cargo industry. First, the growth of e-commerce continues to drive demand for time-sensitive deliveries. Many air cargo operators have significantly expanded their air freight capacities to meet customer expectations for next-day or same-day delivery. About 25% of all air cargo is today attributed to e-commerce movements.
Second, digital transformation is revolutionising logistics operations. Technologies such as artificial intelligence (AI), blockchain, and the Internet of Things (IoT) are being adopted to enhance transparency, optimise routing, and improve customs processing. These innovations increase efficiency and reduce costs.
Third, environmental sustainability is becoming a central focus. Airlines and logistics providers are investing in more fuel-efficient aircraft, sustainable aviation fuels (SAFs), and carbon offset programs to meet regulatory requirements and consumer expectations. This shift is essential as the industry faces increasing scrutiny over its environmental impact.
Lastly, the industry is experiencing increased integration with multimodal transport solutions. Air cargo providers are collaborating with sea, rail, and road operators to develop seamless supply chain networks that balance speed, cost, and sustainability.
Challenges facing the air cargo industry
Despite its strategic value, the air cargo industry faces several significant challenges. One of the most pressing is capacity management. With trade becoming less balanced we are seeing increased challenges in securing profitable capacity deployment with trade lanes showing load factor variations of up to 60% in directional difference.
Another key challenge is infrastructure and regulation. In many regions, airport infrastructure lags demand, limiting the efficiency of cargo handling and customs processing. Additionally, regulatory discrepancies between countries can create delays and increase administrative burdens for cargo operators.
Security concerns also persist. Air cargo is a target for smuggling, terrorism, and cyber threats. Ensuring secure supply chains while maintaining efficiency requires continuous investment in screening technology and cybersecurity measures.
Labour shortages and skill gaps are emerging issues, particularly as the industry becomes more technologically advanced. Attracting and training skilled workers – both operational and digital – will be crucial for future growth.
“Air cargo contributes to global GDP by supporting just-in-time production processes and enabling the expansion of e-commerce.”
Opportunities in the air cargo industry
Despite these challenges, the air cargo sector has considerable growth opportunities. The expansion of global middle classes – particularly in Asia, Africa, and Latin America, which combine to add over 100 million new consumers each year – will boost demand for imported goods and fast delivery services. Emerging markets represent untapped potential for air cargo operators seeking to diversify their networks.
The ongoing digital transformation of logistics presents another major opportunity. Companies that invest in automation, predictive analytics, and real-time tracking will gain a competitive edge by offering more reliable and cost-effective services.
Sustainability initiatives, while challenging, also offer new revenue streams. Operators that adopt greener technologies and comply with environmental standards can attract environmentally conscious clients and secure government incentives or subsidies.
Risks associated with tariffs and trade restrictions
One of the most significant risks to both international trade and the air cargo industry is the resurgence of protectionism. Tariffs, quotas, and non-tariff barriers such as product standards or customs delays can severely disrupt trade flows. Trade wars – such as the US-China dispute – have led to increased costs, rerouted supply chains, and lower shipping volumes for air freight.
Uncertainty surrounding trade policies makes it difficult for companies to plan long-term investments in logistics infrastructure and fleet management. Moreover, sudden changes in tariff regimes can cause volatility in cargo demand, impacting profitability and network stability.
Geopolitical tensions and regional conflicts also pose risks. Sanctions and export controls can lead to abrupt restrictions on cargo routes or prohibited goods, requiring rapid operational adjustments.
Conclusion
International trade remains a cornerstone of global economic prosperity, and the air cargo industry is a critical enabler of this interconnected system. While facing significant challenges such as infrastructure limitations, regulatory complexities, and geopolitical risks, the sector also has immense opportunities driven by technological innovation, e-commerce, and globalisation.
Adapting to evolving trends and mitigating risks related to trade restrictions and environmental impact will be key to the industry’s sustainable growth.
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