If you’re a ULD manager, making sure your ULD fleet has enough of the right types of air cargo containers is always a priority. And since the global distribution of COVID vaccines is in full swing and looks likely to continue to at least the end of 2022, it’s probable that you’ve been focusing on cool containers for the last few months.
Having your attention captured by the pharmaceutical sector is understandable, given the circumstances. But let’s not forget that vaccines represent only a small slice of the cold chain pie. An entire range of perishable materials rely on temperature-controlled transportation, from flowers and fruit to paints and cleaning detergents.
Together, perishables account for roughly 17 percent of total air freight. For sure, transporting salmon or cherries may not be as sexy as life-saving vaccines, except that’s a whole chunk of valuable business that shouldn’t be overlooked.
But what’s the outlook for air cargo in general and for the cold chain market in particular? Is it worth investing in more and better cool containers for your fleet? Let’s take a look.
Figure 1: The cold chain market is so much more than pharmaceuticals
Cautious optimism for the future of air cargo
It may be a bit erratic and geographically uneven, but the air freight industry’s recovery from the pandemic is giving cause for cautious optimism. According to Boeing’s World Air Forecast 2020-2039, world air cargo traffic is predicted to grow by 4% a year over the next 20 years, despite the recent turmoil. That’s more or less the same rate as the previous decade.
Much of that growth will be driven by the expansion of domestic China and intra-east Asia and Oceania markets, of course. But what about the planes that carry the cargo? Well, Boeing assumes that long-haul wide-body passenger belly capacity, which is still struggling to re-emerge from its virtual disappearance last April, will return to normal once the current disruption is over.
It’s a different story for freighters, though. You should be prepared to see a dramatic increase in the number of dedicated freighters over the next 18 years. That increase could have a bearing on your fleet’s mix of containers since it may well boost the need for main deck containers, especially for integrators.
In short, it is thought that:
- East Asia-North America and Europe-East Asia trade flows will grow slightly faster than trade flows between North American and Europe to produce an annual growth rate of 4%.
- Belly capacity will continue to provide unique value on non-cargo routes for dedicated freighters and integrators, but the freighter fleet will expand by 60% to meet projected traffic growth.
- Opportunities to steal some business from shipping lines are likely to arise, especially in the cold chain sector, which is often willing to pay a premium for fast delivery.
The factors affecting the cold chain market
The cold chain is well known for being a complex quality logistics system thanks to its time-sensitive and temperature-sensitive cargo. During the pandemic, demand for perishable products surged, although rather patchily. Some applications (like flowers) suffered, while others (like food) benefited.
Looking forward, the global cold chain market is expected to grow at a compound annual growth rate (CAGR) of 14.8% between 2021 and 2028. That’s for road, sea, rail and air. But what’s driving this growth? Several things:
- Technological advancements in warehouse management and refrigerated transportation (e.g., the automation of refrigerated warehouses and the automated monitoring of cool containers).
- Consumer demand across the globe for cold chain solutions, from retailers in emerging economies to online shoppers buying perishable foods and expecting out-of-season produce. The increase in living standards, especially in China, is a particular driving force.
- Government efforts to reduce food waste and introduce supply chain sustainability initiatives (approx. one third of global food production is wasted, according to the UN).
- Trade liberalisation and bilateral free trade agreements, which are creating more opportunities for exporters to trade in perishable foods without attracting import duties.
- Increasing food standards, supported by initiatives such as IATA’s Centre Excellence for Independent Validators (CEIV) accreditation and the Foundation Food Safety System Certification 22000 (FSSC 22000), which offers a complete auditing and certification scheme for Food Safety Management Systems (FSMS).
It certainly seems the cold chain market is on an upward trajectory for at least the next decade, and that the perishable sector will be providing plenty of business opportunities for freight forwarders and transport integrators. Which brings us to the issue of cool containers and the vital role they play in any ULD fleet.
Finding the right cool containers for your ULD fleet
Perishable products are usually shipped at either deep frozen (<-20C) or chilled (5-8C) temperature ranges, and these days there’s a variety of passive and active cool containers that enable global temperature-controlled transportation services. Technology plays a key role here, providing innovative features such as sensor monitoring, real-time alerts and data logging, but so do more mundane features such as insulating materials and refrigerants.
What type of cool containers you buy or lease for your own ULD fleet depends greatly on a few things, including the:
- type and volume of the perishables you’re transporting
- time it takes your cargo to reach its final destination
- ambient temperature of the container during its journey
- safety and regulatory standards you have to comply with
- efficiency of the airports’ custom clearance procedures
- weight and build quality of the cool container
- cost and efficiency of the container’s packaging solution
- customer service expectations and requirements
- short- and long-term business strategy of your company