Global air freight has certainly felt the force of a volatile market in recent years, but its importance as a mode of transport has soared through the 21st century overall. According to Statista, air freight traffic increased from 40.9 million metric tons in 2004 to 65.6 million metric tons in 2021 – representing a significant increase of more than 60%.
This surge across the globe can be put down to a number of factors, but two have primarily been the driving force: the rise of global e-commerce connecting retailers and consumers worldwide, and the cost of airline fuel making freight more affordable.
Now in 2023, the air freight market finds itself in something of an uncertain position. Weaker economic conditions have reduced consumer demand and subsequently slowed trade volumes/urgency, while the likes of fuel price fluctuations and capacity constraints have contributed to businesses choosing alternative transport services and having a detrimental ripple effect on the market (Globalia Logistics Network).
Even so, overall dependence on air freight still very much exists for companies across multiple segments needing speed, flexibility and reliability in their cross-border shipments – particularly for time-sensitive and high-value items. The automotive industry, for example, relies heavily on air freight to transport components to production lines in order to maintain schedules, as well as finished vehicles to enhance customer satisfaction in terms of delivery speed (Freight Waves).
So although air freight is undoubtedly faced with challenges, global appetite is set to remain solid in the coming years. In fact, Statista’s forecast data estimates that air freight’s market value in Europe will decrease slightly from $42.21 billion in 2022 to $41.61 billion in 2024, before bouncing back and reaching $42.93 billion in 2027.
Not only does this herald the need for available and reliable capacity on freighter aircraft, but with market uncertainty comes the need for flexibility and resilience in the face of adversity – which is where integrated solutions beyond air freight can play their part
In central Denmark lies the small town of Billund, which unless you’re a Lego enthusiast, you perhaps would never have heard of. With a population of just 6,742 residents, Billund would quite possibly be considered a sleepy town were it not for more than 2 million tourists visiting every year bound for the festivities of Legoland.
And it’s in the home of Lego where the building blocks of Maersk Air Cargo’s future strategy in Europe have been laid, thanks to the launch of the Billund Hub.The new facility is home to a fully equipped 4000m² import and 13,000m² export facility, as well as separate areas for cold storage, dangerous goods, scanning and unit load device (ULD) handling.
Billund Airport itself is conventionally small as far as European airports go, with just 29 airlines flying to 67 destinations and estimated passenger traffic of 3.5 million annually. To put that into perspective, Schiphol Airport in Amsterdam hosts 72 airlines flying to 270 destinations and total passenger traffic of 52.2 million in 2022 (Aviation Source).
For customers, this means transit is more reliable, with flights being traditionally less susceptible to congestion and delays at smaller airports. However, the key benefits at Billund stem from Maersk being the airport’s number one customer on the ground, as Maersk aircraft are subject to priority loading and unloading by crew.
Not only would loading and unloading take considerably longer at larger airports further down the priority list, but recent months have seen ground handling issues across Europe (including strike action and labour shortages) causing significant delays and flight schedule alterations.
With Maersk having its own pilots, maintenance staff, operations and forwarding teams on site at Billund together with a self-controlled aircraft network, there are fewer external entities to rely on within operations – adding further reliability benefits to customers.
Air freight customers are particularly vulnerable to such delays given the time-sensitive nature of their cargo, so getting goods off planes and on to the next part of the journey as fast as possible is crucial for meeting demand. With less areas of supply chain vulnerability, customers can better plan their logistics operations and ultimately ensure faster speed to market for revenue opportunities.
We have seen an overwhelmingly positive response from our customers and the market on the establishment of Billund as a European hub for Maersk Air Cargo. They recognise the importance of having our own controlled flights and airline, especially in the current volatile market. Maersk’s ambitions to be an end-to-end integrator are made even more clear by the investments within the air freight product, and this is just the beginning.
Focus on the integrator vision
Reliable flights in and out of Europe is just one piece of the puzzle for businesses using the Billund Hub, as connecting the dots of the supply chain also requires onward, integrated and flexible transportation solutions.
Billund may be situated outside of mainland Europe, but its close proximity to warehousing, the road network and APM terminals (including the Port of Aarhus with rail and ocean connections), unlocks the benefits of the integrator vision.
Connecting with destinations across Europe will primarily be the task of Maersk Air Cargo-commissioned Road Feeder Services (RFS), which run daily to other Nordic airports, Germany, Belgium, The Netherlands, Luxembourg and Poland.
So while Billund may not be as close to northern Europe as the likes of Schiphol or Frankfurt Airport, the time savings of priority unloading on the ground coupled with specialised customs clearance and onward connectivity means that access to European markets is fast and reliable. Plus, Maersk’s global network of transportation options adds flexibility when faced with bottlenecks, allowing you to react to potential disruptions and crucially keep your supply chain moving.
Speaking at the launch of the Billund Hub, Lars Vorm Rudnicki, VP of Indirect Procurement and Supplier Development at energy company Danfoss, outlined the benefits of integrated logistics: “We are using Maersk today on the ocean and of course there's been some very challenging times on transportation lately. I think we have really shown how to work together and face these challenges and by that I think we have the right partnership going forwards, also on air freight. From Danfoss' side, we are really looking forward to taking the journey on the new chapter that you're opening here at Billund."
To Hangzhou and back
Part of the launch of the Billund Hub saw wheels go up for the first time on the new Maersk Air Cargo service between Billund and Hangzhou, China, with newly converted Boeing 767-300 freighters taking off three times per week initially.
The new service is a direct product of customer demands, as China's re-opening after the challenges of the pandemic has brought about a multitude of opportunities for European businesses. Not only in terms of branded commodities being exported to China in line with restored consumer demand, but also importing from China itself and the ever-growing manufacturing presence of southern Asia (ASEAN – Association of Southeast Asian Nations).
China's prominence in terms of exports speaks for itself, but southern Asia is rising fast with high-end electronic, pharmaceutical, automotive, fashion and further industries seeking out new bases in the region – including the likes of Apple, Google and Samsung. It's little wonder Arsjad Rasjid, chairperson of the ASEAN Business Advisory Council, told Al Jazeera that "ASEAN should be the supply chain of the world, the new China is ASEAN".
Connectivity is the all-important factor in transporting products between Asia and Europe, which is why Maersk ensured Hangzhou Airport followed the same business model as Billund: smaller operations for faster ground clearance, on-site cargo/customs handling and connected transport services across China and ASEAN.
Shanghai, for example, is only two hours away by truck with vast onward connectivity, while the city of Hangzhou itself is home to many global companies across various sectors with air freight needs. The likes of Hisun Pharmaceutical, Geely Automobile, Hikvision (video surveillance) and Wahaha Group (beverages) are all based in Hangzhou and cater to European customers, with speed to market crucial behind maintaining product quality and value to drive growth and profitability.
The new service between Billund and Hangzhou not only opens up opportunities for businesses on both sides of the route, but it also adds predictability and resilience to supply chains. Scheduled flights with controlled capacities are a vital air freight customer need, while integrating onward services allows for various markets to be served quickly and reliably.
Flexibility is very much the name of the game for air freight customers, but procuring capacity, overcoming wider supply chain bottlenecks when needed and reaching consumers at speed requires the right logistics partner with the right infrastructure in place for facilitation.
The launch of the Billund Hub and new service to/from Hangzhou has given customers the necessary tools to do exactly that, all the while making customer supply chains less vulnerable to disruption with the convenience of integrating it all through one provider.
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