THE HISTORY AND FUTURE DEVELOPMENT

OF AIR CARGO
ASSIGNMENT
CARGO HANDLING AND OPERATIONS

D.A.K.P. DANDENIYA
LG/13/278
GENERAL SIR JOHN KOTELAWELA DEFENSE UNIVERSITY

What is air cargo?

First of all before discussing history and the future development of air cargo industry it is best to
look at the concept of what air cargo is? Simply we can say that air cargo is anything other than
persons or personal baggage traveling by air. When compared to other forms of cargo
transporting modes air cargo is the newest form of cargo transportation and since its start air
cargo had taken a promising role of transporting low weight high value commodities. Air cargo
accounts for only around 2 % of the total freights but it accounts for 30% of the total cargo value.
Air cargo had helped the people around the globe to connect each other in freight more reliable,
faster and safer than other modes of transportation. This paper work will discuss about the
history and the future development of air cargo. Today the air cargo had developed rapidly that
there is separate carriers designed specially for cargo and lots of institutions and

History of air cargo

Even before the aircraft, mail was moved by balloons, dirigibles and carrier pigeons. After the
introduction of air cargo service the first cargo moved by aircraft was on 7 November 1910 when
a few bolts of silk were transported by air from Dayton to Columbus, Ohio. The following year
in 1911 was the start of moving post by air freight was experienced, and by 1914 regular air
service began in the United States. In Germany, the first official air mail flight occurred in 1912.
However, it was not until 1925 before a well stated airmail service was available in the U.S. On
October 7, 1925 the first five Contract Airmail (CAM) routes were issued by the U.S. Postal
service to fly airmail between the origin and destination. Although limited air freight services
were tried prior to World War I, it was not until the end of the war that such services boomed in
a huge scale due to so many facts. Primarily due to the availability of surplus airplanes and
trained military pilots, most of those early commercial services were made possible by subsidies
provided by national governments.
World War II caused a rapid expansion of the air cargo industry and for the first time, large scale
movements of freight were carried out to support the war around the globe. For example, in
support of Chinese over 650,000 tons of cargo was transported between India and southern
China.

We all enjoy the door to door service now a days. It came in to practice for the first time around
1970s. When it comes to courier service Dalsey, Hillblom and Lynn started DHL in 1969, and
Fred Smith started Federal Express in 1971 which is called as FedEx. That two incidents
changed the world pattern of air freight.
Early years the priority was given to increase the speed so as to increase the efficiency. But for
the first time in the world in 1970s the era of the wide bodied jets started when the first Boeing
747 entered service. This was the first time in history that the aviation industry chose size
over speed to increase performance. In the beginning only the passenger market was serviced
by these new wide-bodied aircraft until Lufthansa flew the first Boeing 747 freighter in April
1972 between Frankfurt and New York. The much larger wide-body increased the volumes
carried by narrow body aircraft by a large factor. By 2012, there were 1738 freighters in
operation worldwide. 37% of these were large wide body (more than 80 tons) aircraft, 36%
were medium wide-bodied aircraft (40 to 80 tons) and 27% were standard bodies with carrying
capacities of less than 45 tons.
When talking about the history of air cargo we can find there are two main areas we all have to
talk about. That is the development of air cargo in Europe and US. Because that two are the main
areas that helped for the development of air cargo.
When talking about Europe civil aviation grew drastically after the end of World War I, to cater
the demands from national postal services. The first cargo-only, scheduled commercial air
company began service between Paris and Lille (France) in July 1919. Aircraft that transported
passengers during the day were often used for mail and freight transport at night. Lufthansa,
founded in 1926 in Germany, started cargo only air freight services in 1928. With the promise of
major subsidies, many smaller airlines agreed to merge, to form Imperial Airways Limited.
Imperial Airways soon operated in all corners of the British Empire, transporting mail and goods
between London Airport and destinations such as Cairo, Sydney, Delhi, and Basra. In 1939, after
the start of World War II, Imperial Airways was nationalized and merged with British Airways
Limited and the formed a new airline, British Overseas Airways Corporation (BOAC), a start of
British Airways. As British government concerned airlines as a national security importance
those airlines which were started as private sector companies were nationalized thereafter.

When it comes to the United States perspective the first milestone of air freight transportation
took place in 1910, which is shipping of bolt of silk by air from Dayton to Columbus. The first
well standard air postal service was operated by the US Army in July 1918 and it was occurred
between Washington DC and New York City. Similar to the experience in Europe, postal service
was the foundation of air freight in those early years. We can estimate the rapid growth of air
mail service by comparing the number of letters carried out by year to year comparison. That is
that in 1918, 713240 mail pieces were transported; by 1927, the number had boomed to more
than 22 million. From that statistic we can clearly identify the rapid growth of air mail as an air
cargo. By the start of World War II, the US air transport system was the largest in the world,
handling more than half of all global passenger trips and just over one-third of mail traffic. The
official first cargo service in the United States history was started on December 2040 by the
name of United Airline and with the end of the war most of the airlines together with United
Airline started their own commercial service. In 1944 Chicago convention was held and
internationally agreed principles and rules came in to practice regarding air cargo. International
Civil Aviation Organization was also started with this convention. US Airlines quickly draw
backed because of series of accidents and as there was a possibility of bankruptcy. Slick Airways
sustained moderate growth for a time before shutting down due to the airlines inability to
compete with big passenger airlines that had introduced for the services.

Future Development of Air Cargo

When discussing about the future development of air cargo industry first of all we can point out
an interesting fact that air cargo industry opened a new era on March 2012 that is from earth to
space. The unmanned, privately owned Space X Falcon 9 rocket's nine-day trip delivered a
payload of 1,300 pounds of food, clothing, and scientific cargo to the space station making that
historical event the first commercial cargo transports into space.
The development of air cargo had ups and downs. In 2010 and 2011 period international air
cargo traffic declined from about 1% and annual growth declined from half the normal rate and
the normal rate was around 2.6%. But in 2011 international express shipments grew from about
3.6%. According to International Air Transport Association in 2012 total air freight market had

grown 4% compared to 2011. We can see the most development area was between Asia and
Unites States with exchange of technology products. From this we can forecast an insight of the
future of air cargo industry.
When talking about the future of air cargo we can identify some challenges that the air cargo
industry will have to face in the future. Actually these challenges are derived from the present
and we can imagine this type of challenges will occur in the future too. The first thing to be
considered is the increasing fuel cost. Fuel costs continue to impact air freight, but most players
view the price volatility as a cost of doing business over which they have little control. Fuel
represents near half the global expenses for air cargo carriers. We can imagine as the fuel is
becoming a resource with less production rate and as it is decaying the price of fuel may rise
further more in near future. The next thing is that the European economic crisis, the economic
crisis is heavily impacting the European airfreight market and as the countries around the globe
are interdependent it affects the overall air cargo industry in the world. So we can forecast that
this type of economic down falls will happen again and again in the world due to the existing
economic structures. And another challenge that air cargo industry will face is Nearshoring. That
means cargo will not be transported for very far countries due to high cost and instead they will
be transported to nearby countries. This concept arise due to the new world trend of
regionalization instead of globalization. The worst scenario is that this short distance transporting
of cargo will be done by land or rail.
While air cargo carriers face challenges, they also can seize opportunities. Developing markets
are a particularly bright opportunity for them to be success in the future. As labor rates rise in
coastal China, many manufacturers are shifting production to the country's inland regions, Asian
countries west of China, Africa, and South America, particularly Brazil. Interest is also growing
in Russia. So this had become a good opportunity for air cargo industry as they can find new
markets and as harbors are not located inland air cargo will play a leading role in that.
The airlines are willing to introduce a GPS solution that enables shippers to track the location
and condition of high-value, time-critical, or other important shipments. Air cargo users view
GPS as adding even more visibility to a supply chain that has already benefitted from
technology's ability to track shipments.
Sometimes airfreight challenges will give creative solutions. One example is the use of regional
airlines to avoid the congestion and delays that can occur at major airports. Regional airlines tend

to use smaller airports and require less time for operating. A less-congested airport means more
on-time flights and faster movement from plane to cargo facility. This trend also come with the
above mentioned regionalization.
Another future movement of air cargo industry which is happening at the present also is the
quick delivery need. Most of the companies in order to reduce their storage cost they tend to use
Just In Time system. So when they need raw materials they put quick orders and then they wait
for the order to come. The sea transport cannot be used to this because of that it is too slow so
they cannot fulfill the demand of their customers on time. So they go for air cargo as it is faster.
It is a new emerging trend of air cargo industry where they can take advantage in.
Moving goods safely and securely is a priority for airfreight carriers. But mounting regulation is
challenging their ability to operate efficiently. Costs associated with security today are 10 times
more than in 2001, reports Lufthansa. Security measures will be highly improved in the future of
the air cargo industry as it will become one of the major components of why customers go for air
cargo.
Another important development of the future is Sustainability. It is becoming an increasing
concern, but it can be challenging for shippers to directly pressure carriers on sustainability
issues. Freight forwarders find it difficult to decrease carbon fuel use. Airlines try to make the
largest sustainability remedy by replacing old aircraft with new, more fuel-efficient models.
Aircraft currently in use are 70 percent more fuel-efficient than the first generation of jets,
emitting proportionally less carbon dioxide (CO2), according to IATA. The newest generation of
airplanes offers an additional 15- to 20-percent improvement in fuel usage and CO2 emissions.
The industry is planning to use bio fuel that reduce the effect of carbon emission to the
atmosphere. This trend had given air cargo industry a competitive advantage that one airline can
argue that our planes are more environmental friendly.
The use of technology more than the present will be a future development of air cargo industry.
Advancing the use of electronic documentation, which promises to enhance the industry's
security, efficiency, and sustainability by replacing paper documentation with online transactions
can be seen too.
So with all those facts discussed above regarding history and the future of air cargo industry. We
can see that air cargo industry will definitely rise up if they mitigate the challengers and adopt
according to the world trend.