The air cargo industry can be a crucial component in the supply chain, on many different layers and in many different segments. It represents roughly 1% of the overall freight industry by weight.
The demand for air freight is limited by cost, typically priced 4–5 times that of road transport and 12–16 times that of sea transport. Air freight rates generally range from $1.50–$4.50 per kilogram, while the value of air cargo typically exceeds $4.00 per kilogram. Commodities shipped by air thus have high values per unit or are very time-sensitive. Such commodities include documents, pharmaceuticals, fashion garments, production samples, electronics consumer goods and perishable agricultural and seafood products. They also include some inputs to meet just-in-time production and emergency shipments of spare parts. Demand for airfreight exports has been limited from developing countries because most enterprises ship small volumes of low value goods. The main exports shipped by air from developing countries are cut flowers, electronic parts and fresh fruits and vegetables. Imports by air typically include high-value consumer goods. However, without a significant outbound flow, the inbound air freight rates are higher — reducing the types and quantities of goods transported by air.
Passenger and freight mutuality
The industry may be segmented into several groups:
- Scheduled passenger airlines: As much as 50% of all cargo is transported in the bellies of passenger airlines. Passenger airlines may also operate dedicated freighters, such as Lufthansa and Air France. Passenger airlines carrying cargo are referred to as "combination carriers" and are considered the traditional mainstay of the industry, along with the scheduled cargo-only carriers;
- Scheduled cargo only: Carriers such as Cargolux and Martinair provide regularly scheduled cargo-only flights. Combination carriers and dedicated carriers, along with their freight forwarders, together account for 90% of all air freight tonnage;
- Integrated express carriers: These carriers provide full service and compete with the more traditional freight forwarder/scheduled carrier combination. The cargo carried consists mostly of small packages. Networks of express carriers, though not necessarily globally integrated yet, are developing even in the poorer regions of the world. According to Boeing, the integrated carriers, though globally not a dominating segment, are gaining in market share;
- Dedicated charter operators: These are operators that are hired for specific delivery and do not carry a regular schedule. Providers of complex services are included here, such as extra-heavy lifting capabilities. The dedicated charter operations only account for about 25% of total charter operations, with the bulk of charter operations actually being carried out by scheduled carriers;
- Special operations: These include humanitarian relief and also within-production transport, such as the carriage of assembled aircraft sections between various assembly plants.
Most air freight is handled at airports which combine passenger and cargo services, although the minimum installation for dedicated cargo flights is a dedicated cargo apron, allowing for the efficient loading and unloading of aircraft, with dedicated customs facilities close by for international cargo.
The cost and revenue structure of passenger airlines is generally based on Revenue Passenger Kilometers (RPK) and cargo capacity sold is a bonus source of revenue. Passenger airlines, therefore, can sell excess cargo capacity at extremely low prices compared to operations whose returns on investments are completely dependent on air cargo.
Most of the scheduled air transport that is non-express (i.e. not involving integrators) has freight forwarders as the direct client, who purchase freight capacity ahead of time and schedule the space of their client's shipments. This arrangement can at times cause delays for smaller packages and also presents a challenge since the forwarding is a relatively low-risk, less capital intensive operation than the actual freight operations of the airlines. In terms of tonnage, about 90% of all airfreight is handled by combination and dedicated services using freight forwarders.
The speed of smaller air cargo shipments is also affected by the role of the freight forwarder. One reason dwell times may go up is because forwarders hold up shipments of smaller packets in order to consolidate a larger pallet sized shipment to fill a given capacity purchased from an airline.