Fashion
Airborne logistics networks are expanding in Asia as demand for air cargo delivery in the region is forecast to roughly double in volume over the next two decades.
Garuda Indonesia and budget carriers are rapidly expanding operations to capitalize on the increase of goods traded via e-commerce as well as electronic products and parts. But with other transporters, including global leaders, stepping up competition, the industry may undergo a shake-up.
Indonesia has more than 13,000 islands, and Garuda, the country’s national airline, plans to establish an airborne logistics network connecting the core islands. As a first step, Garuda is eyeing a 40% increase in the number of its domestic freight bases to 100 by the end of 2017.
Domestic demand for airfreight delivery is strong due to Indonesia’s growing middle class, Muhammad Arif Wibowo, president and CEO of Garuda, said. With the increase in e-commerce giving consumers faster access to goods and growing demand for fresh food, land and maritime transportation alone cannot handle the increased freight volume, Wibowo added.
In the first nine months of 2016, Garuda chalked up $155 million in sales in its freight business, up 13% from a year earlier. While this accounts for 5% of Garuda’s consolidated sales, the carrier intends to raise the ratio to more than 10% as its initial target, Wibowo said.
Flying high
Global routes for air cargo transportation are roughly divided into five major networks: Asia/Pacific-Europe, Asia/Pacific-North America, Asia/Pacific, Europe-North America and North America.
Asia is leading the sector’s growth. Japan Aircraft Development Corp., a consortium of Japanese commercial aircraft developers, forecasts that demand for airfreight services in the three Asia/Pacific networks will grow on average 3% per year and roughly double from the 2015 level by 2035. The average growth of demand on the Europe-North America route and within North America is projected at around 1% each.
Ocean shipping in Asia is currently slowing. According to the Japan Maritime Center, the volume of ocean cargo transportation dropped 3% in terms of the 20-foot equivalent unit in 2015 from the previous year and logged a 2% year-on-year fall in the January-October period of 2016.
The slowdown in ocean shipping possibly reflects the consolidation of plants and increased local production by manufacturers.
