With more and more shippers using air cargo to enhance their global supply chain strategies, the airfreight industry has no place to go but up.

Projection numbers from some of the world's leading industry watchdogs speak for themselves. The Boeing World Air Cargo Forecast projects world air cargo will grow 6.1 percent per year and triple by 2025 from 178.1 billion revenue tonne-kilometers (RTK) in 2005 to over 582.8 RTKs in 2025. During those 20 years, the international market is expected to outpace domestic growth, exceeding 84.2 percent of total RTKs.

The International Air Transport Association (IATA) indicated marginal growth of 3.2 percent for 2005 and 4.6 percent for 2006, with high jet fuel prices and strong competition from other transport modes (particularly in Europe) identified as key contributing factors. According to the IATA, North America was the most improved market in 2006 with airfreight growing from 0.4 to 6.0 percent as airlines switched capacity towards cargo resulting in an 80.2 percent load factor, up from 79.5 percent in 2005.

“Load factors, at an overall record high of 76 percent, were the good news story for 2006,” says Giovanni Bisignani, IATA's direct general and CEO.

Loads improved in all regions except the Middle East and Africa. But going forward, Boeing projects the U.S. carrier share of the world market, currently at 27.2 percent, will fall to 23.5 percent by 2025. Not surprisingly, the greatest growth is expected in markets linked to Asia. IATA estimates new international freight traffic will grow a whopping 30 percent for intra-Asia traffic.

It's important to keep in mind that at 5 percent, air cargo remains a small piece of the world trade pie. “In terms of unit weight, we estimate this to be about 36 million tons moved annually,” says Tom Crabtree, regional director, marketing, for Boeing Commercial Airplanes' Air Cargo Industry Analysis Group.

By comparison, the United Nations Council on Trade Development reports the world maritime industry moved 7.2 billion tons in 2005. But this figure includes bulk commodities such as oil, metal ores, and grains that cannot be compared directly to higher-value dry commodities associated with air freight.

“Even if you look at containerized cargo traffic that generally encompasses higher value semi-finished goods, air cargo is still a fraction of the total world market,” Crabtree contends. “By our calculations, air freight is about 1 percent that of the total containership industry.”

Yet air cargo represents over 36 percent of all transported cargo by value ($3.25 trillion) and generates $50 billion in annual revenues. “Short of an environment collapse such as the world being hit by an asteroid, this indicates that the air cargo industry has no where to go but up,” Crabtree remarks.

Other factors contribute to this optimistic outlook, such as expanded cargo capacity offered by the more fuel-efficient aircraft scheduled to come on-line. “The more we improve our product and the more shippers get used to the speed element that air transport provides, the more our industry will grow,” Crabtree states. “And the more we improve our product, the more the costs to move product diminishes.”

In coming years, freighters will overtake demand for belly capacity in passenger aircraft with the world freight fleet nearly doubling from 1,789 to 3,563 aircraft. By 2025, 1,209 airplanes will have been retired and 2,983 added to the freighter fleet. For the time being, expansion will be challenged because manufacturers can only build and deliver so many aircraft at a time.