Moving Freight in the Skies, With Plusses and Minuses

In the skies above us millions of pounds of air freight are on the move today, to near and far destinations. “The global economy relies on air cargo,” notes Nehal Gautam in The STAT Trade Times, but “the relentless growth comes at a steep price.” The convenience of air cargo is most welcomed by shippers and receivers -- but for some stakeholders, air cargo is a seen as a major contributor to GHG emissions.

What are the facts? The International Energy Agency (IEA) reports that global GHG emissions increased 1.1% in 2023, accounting for 410 million tonnes, with aviation contributing about 2% of the total emissions. And so, as air cargo traffic goes up, with freight moving in both all-cargo and passenger aircraft, so do emissions and the overall environmental burden of the industry increase.

What to do? One step forward is the introduction of sustainable aviation fuels (SAF), which are biofuels coming from such sources as plant oils and waste materials. Airlines and especially air cargo carriers are introducing these fuels to the mix. This includes Virgin Atlantic, Cargolux, Norwegian Air Shuttle, and Cathay Pacifici. Responding to customer needs, Airbus is introducing new aircraft to the mix with greater fuel efficiency, such as its A350F.

And where air cargo aircraft comes down to Earth is getting attention. Airports are investing in sustainable infrastructure (such as solar power, and “green taxiways” for more efficient movement) and addressing air cargo environmental concerns – as “a wave of innovation is taking flight.”

The STAT Trade Times article, which is one of our Top Stories, is a comprehensive wrap up of the state of the air cargo industry (negatives and positive) and related players (regulators, industry associations, airport managers, aircraft manufacturers, and other stakeholders) involved in “sustainable innovation.”

Our Top Stories also include two reports from McKinsey & Company examining the air cargo industry. In its report “Air freight 2025: Agility, speed, and partnerships,” McKinsey noted the air cargo sector “all too often clings to legacy technologies” and newer entrants can easily disrupt traditional approaches. Example: Amazon, a major innovator in logistics, is now building an air cargo hub in Cincinnati, Ohio, where a 3-million square foot facility will have 100 aircraft parking spaces, with discussions about acquiring many more air freighters.

In a rapidly-changing operating environment, McKinsey’s Ludwig Hausmann, Matthiew Pelissie du Rausas, and Mathieu Weber say air cargo carriers will need great agility, speed, and deeper alliances, to provide better service and higher quality and transparency, as shippers re-design global production networks and such innovations as advanced robotics, drones, and AI influence the industry.

What about better “greening” of air cargo? There’s opportunity there, according to McKinsey’s Elliott Tinnes, Fernando Perez, and Matthew Kandel, exploring the challenges of “Decarbonizing logistics, Charting the path ahead.” Surveying 250 shippers for their views on lower carbon shipping, they found that the majority of companies are now integrating “green shipping” into their logistics programs, with 70% indicating they would pay more for green shipping. The overall demand for green logistics could reach US$350 billion by 2030. More reasons why the air cargo sector needs to innovate to reduce carbon emissions.

The G&A Institute Climate Team has developed tools and systems to help companies with climate related challenges, opportunities and emissions calculations relevant to cargo and logistics. If you’d like more information please contact us. We are closely monitoring the air cargo sector and global logistics trends, and we will continue to share progress (and lack of) through our various communications channels.

This is just the introduction of G&A's Sustainability Highlights newsletter this week. Click here to view the full issue.