Why I’m Bullish on the Future of the Air Freight Market
A friend of mine likes to say that the world’s biggest challenges are also an entrepreneur’s greatest opportunities – and our industry is certainly in challenging times.
Entrepreneurship and innovation go hand in hand. It is hard to create something no one else has done before and do this against the traditions of an established industry. It takes fresh new thinking, and use of new technologies to create your prototypes, modeling and testing as well as new partnerships in engineering, design, and finance.
The transportation industry has key long-term drivers but also short-term hurdles. In the last 18 months, the U.S. saw inflation rise more than 7%, the biggest increase in nearly 40 years according to CBS News. In addition, this increase keeps edging higher – especially in other parts of the world. Much of this has been traced to the rising costs of labor, packaging, transportation and sluggish supply chain challenges – impacting everyone from governments to families.
A new vision for freight delivery must be keenly focused on being more sustainable for the long-term, which will make it concurrently less impacted and reactive to short-term fluctuating market influences. Those we can prepare for.
The key is maximizing efficiencies in our long-term delivery systems: more innovative design in our transportation vehicles; more efficient packaging that provides more volume for the same amount of weight – and more sustainable and environmentally-friendly fuels to ensure we protect our planet. If we do this, we have the opportunity to expand the air freight market from the $270B it is today to $470B by the end of the decade. In addition, if we focus on the impact of autonomous technologies to ease the labor crunch, we can ease those costs and get the logistics pipeline flowing again. This is exactly where cargo, logistics, and drone industries should be keenly focused.
Fundamental drivers for the Air Cargo Market
Demand: Since the advent of the COVID-19 pandemic in early 2020, which we all know had a severe impact on passenger flight – we witnessed the beginning of a meteoric rise in e-commerce, dramatically increasing the demand for cargo delivery. Analysts have predicted this demand to remain strong through the decade.
Air vs. Sea: There are only two ways to transport cargo across the world: by air and by sea. While air is 50% faster than shipping, it is also 13 times more expensive – so we need to dramatically reduce costs to be competitive. By designing and flying new, more efficiently-designed aircraft and cargo pallets, as well as autonomous and remote-piloting technology, the air cargo industry can gain those efficiencies to be highly competitive with shipping. If we combine this with the use of sustainable fuels, we can be successful, while being productive stewards of our environment.
Design: Today, cargo aircraft are converted passenger aircraft, and pallets have been referred to as trying to fit round pegs in a square space. It is highly inefficient in its ability to carry more capacity for the same weight. This is critical as we hedge against rising fuel costs to meet increased demand. We need new more aerodynamically designed aircraft, and newly designed highly efficient packaging pallets.
Autonomous vs. piloted aircraft: Developing autonomous solutions that are purpose-built to address the needs of the air cargo market is one important step toward developing more robust long-term solutions. Autonomous technologies seek to utilize labor more efficiently, reduce pilot hours away from home through remote piloting, and can make processes safer and more reliable — exactly why we need to innovate with autonomous aircraft, designed specifically for the middle mile cargo market.
Creating new markets: It is the middle mile where autonomous air transport can be highly competitive, especially when there is a pilot shortage on a global scale. The ability to manage flights more efficiently is an important step for aviation – and is something that can be done today. We also want to create new markets where there is now no existing infrastructure.
Climate Change: We have the evidence; now we must act. According to many studies, including those of the ClimateWorks Foundation and serious studies by Airbus and other industry leaders, when an aircraft burns jet fuel, it releases not only carbon dioxide (CO2) but also creates other byproducts including nitrogen oxides (NOx), water vapor, soot, and aerosols which, at altitude, react with the atmosphere and contribute substantially to global warming. Airbus has taken a leading role in the advent and creation of sustainable air fuels – and this is a major initiative for our industry – to police itself – before governments apply highly restrictive measures.
Innovation is usually not developed in a vacuum. It comes from need and our industry has an historic record of overcoming challenges with new ideas. When you are on the precipice of a radical breakthrough in any industry, you can create opportunities to smash the status quo and think differently. We are now at such a crossroads.
Aleksey Matyushev is the co-founder of Natilus, a San Diego based company developing blended-wing aircraft that will increase air freight capability by 60% and lower transport costs by 60%. The company is also focused on lowering carbon emissions by 50%, with a clear path to zero emissions with the use of hydrogen.