Today, because of the current contribution to Scope 3 emissions, some businesses might hesitate to include air freight logistics in their supply chains, particularly if some of their end-consumers regard it to be too polluting. The rather ironic and problematic aspect of this is that often these same end-customers are the ones expecting a high speed to market that currently can solely be achieved by using air freight logistics.
Either way, the use of air freight to move goods around the world is not going away. Experts predict that thanks to “positive global trends in economic activity, including world trade, private consumption and industrial production” the air freight logistics industry will “grow by an average of 4.8 percent annually over the next 20 years”.
The world has changed, and the COVID-19 pandemic has only accelerated that change. More and more people demand goods to reach them wherever they are and as fast as possible. Our society is driving a certain behaviour which indeed results in an increase in air freight requirements. “Overnight delivery,” “next day purchases” or “in real-time notifications,” are all terms we are remarkably familiar with today in the life we live and/or the lifestyle we wish to have.
But if global ecommerce is only going to get bigger, and air freight logistics is not going to disappear or diminish, isn’t the key then to innovate and fundamentally change the way we do so?
Sustainable aviation fuel and regulations
More airlines are joining efforts to set new sustainability standards. “End-customers are forcing sustainable air freight logistics to move faster. The push comes from different angles and is much bigger than it was one year ago, or longer. Fuelled by this, companies must have commitments towards their shareholders, towards society, etc. to work on their sustainability agenda,” says Ferwin Wieringa, Global Head of Air Freight at Maersk.
Today, two of the key actions that can support sustainable air freight logistics are committing to net zero targets, which can be tracked, and choosing sustainable aviation fuels (SAF).
Sustainable aviation fuel (SAF) is now being used by many aviation providers and according to the IATA it can “reduce emissions by up to 80% during its full lifecycle”. This however, and the additional innovation on making it even more effective, needs to be a shared effort between all players both dedicated to flying passengers and/or cargo. There needs to be effort from multiple angles so that multiple technological engineering solutions can be developed. The challenge in this space depends on the maturity of the airlines, the availability of SAF solutions globally as well as the acceptance by end-customers of high intensity emissions associated to aviation.
If we also look at the government regulations in support of sustainable air freight logistics, in 2021 the European Commission presented a package of proposals for reducing net greenhouse gas emissions by “at least 55 % by 2030, compared with 1990 levels”. The official briefing for their ReFuelEU Aviation Initiative quotes: “The Commission proposes obligations on fuel suppliers to distribute sustainable aviation fuels (SAF), with an increasing share of SAF (including synthetic aviation fuels, commonly known as e-fuels) over time, in order to increase the uptake of SAF by airlines and thereby reduce emissions from aviation.” The USA (United States of America) as well introduced a Bill by the name of Sustainable Aviation Fuel Act in the same year stating that “the Environmental Protection Agency (EPA) must establish a low carbon fuel standard for aviation fuels. Under the standard, the EPA must set annual targets in order to reduce certain greenhouse gas emissions associated with aviation fuel by at least 20% by 2030, and 50% by 2050.” The hope is that with these in place, companies and providers will invest more into innovating solutions for sustainable air freight logistics related to fuel and move the needle.
How digitalisation can foster more sustainable air freight
The advancement of digitalisation, and better data visibility, can really support and accelerate sustainable air freight logistic. The expectations of end-customers are changing, and dramatically expediting innovation on actions such as real-time visibility, air freight tracking, reporting, issue resolutions, and improved data quality to be available at their fingertips.
Currently, a high level of complexity within the air freight supply chain stems from the number of different players typically involved, each working on different systems, using different terminology, and following different industry standards. Adding to this, the digital maturity level in some of the countries involved is still low, with processes sometimes remaining manual and paper based. There is therefore a lot of improvement and innovation required in the industry to move to a more digitised way-of-working and move on from an old-fashioned, traditional mindset.
One rare, good outcome from the COVID-19 pandemic was that digitalisation has been expedited to overcome restrictions and distances. Having said this, this is a transformation journey that will still take a few years for its automation and standardisation to achieve maximum effect.
What is next for sustainability in air freight?
When scouting the industry, here are the actions and innovations that are planned to be introduced within the sustainable air freight logistics space, to accelerate its effectiveness.
1. Expanding decarbonisation and other sustainability initiatives to the entire air freight logistics supply chain. Decarbonisation is not only about emissions or fuel. It covers more, including the steps before and after a cargo flight takes off, for instance warehouses designed to be more sustainable, solar panels installed on all roofs, electric forklifts and trucks, recycled pallets to carry the cargo, etc. Sustainable air freight logistics must include all steps of its process.
2. Agreeing to common terms and standards. There is a strong drive to collaborate and bring new initiatives to life, but all players must act together. “If all industry stakeholders are going in different directions, none of what we are aiming for will yield the necessary results. Joining forces will help expedite the entire air freight journey powered by tangible sustainable actions,” affirmed Amit Agarwal, Global Air Freight Sustainability & Analytics Manager at Maersk.
3. Using blockchain to ensure accuracy. As there are no common industry standards around environmental certifications, more projects using blockchain technology such as Avelia - a solution backed by Shell, Accenture, and Amex GBT - will help by providing players with “fully traceable environmental attributes of SAF to help decarbonise air travel.” These will be of immense help to facilitate and ensure that air freight logistics’ sustainable claims are attainable and accurate.
4. Funding better research on battery-powered aircrafts. Working towards electrifying air freight is one of the many ways to reduce its climate impact. And even if there might be a decade before we truly electrify commercial flights with passengers, air freight might be the first to start regularly using battery-powered aircrafts. “Larger-capacity electric planes are also in the pipeline and could take to the skies within the next decade. Still, without major advancements in battery technology, building electric planes that can hold hundreds of passengers and travel thousands of miles will be a big technical challenge” writes The Smithsonian Magazine. Certainly, the innovation in this space truly depends on the progress that can be achieved in designing new types of batteries.
5. Accelerating targets to be ready for an even stronger demand. Air freight, which accounted for 65.6 million metric tons in 2021, is expected to reach USD (United States Dollar) 111810 million by 2027 at a CAGR (Compound Annual Growth Rate) of 4%. Compared to the ocean freight industry where the top four ocean liners control two thirds of the business, the air freight market is highly fragmented with the top 10 forwarders having a market share of approx. 48%. To accommodate this predicted development, common targets will also need to change and grow in line with the market.
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