The report highlights the trends changing the shape of the air freight industry, such as new technology, environmental considerations, the challenges of passenger-to-freighter conversions, developments in electric vertical take-off and landing (eVTOL) aircraft, changes in legal governance, and new legislation.
Key takeaways from the report:
- Drone technology offers unique long-term logistical, cost-saving, and environmental benefits.
- Freight pricing will remain buoyant due to the limited supply and low conversion rate of freighters.
- $8 billion of capital has flowed into the development of eVTOL aircraft over the last five years, with the cargo market expected to reach $58 billion by 2035.
- The passenger-to-freighter conversion market is growing, with roughly 750 conversions projected over the next 20 years.
- Airlines must focus on maintaining high cargo revenue in tandem with passenger flights.
- Investment in newer, more fuel-efficient aircraft is increasing.
- Three kinds of cargo-related liability claims are on the rise.
- Fuel price volatility is expected to have more impact on international aviation than carbon offsetting costs; however, offsetting costs will inevitably need to be pushed onto customers, creating new price pressures.
- Customs authorities are increasingly looking at carriers when it comes to enforcement at the border and liability for noncompliance.
Richard Hakes, co-chair of Reed Smith’s aviation group and London-based partner, said: “After losing two years of air passenger growth to the pandemic, the industry has seen the freighter market as a rare bright spot, fuelled by the boom in online shopping, supply chain disruptions, and a drop in passenger flights. There are, at least, indicators that some of the pandemic-driven boon to air freight will continue, and environmental trends are also working in favour of new, more fuel-efficient freighters.”
“Such a lot has changed over the last two years and while we may not be able to predict the future, if we can identify where and how we should be putting attention and resources, and, using our collective capabilities and experience, hypothesise on what might be round the next corner, then we will be in a better place to support our clients in the industry.”
The report explores dynamics in four key areas for the aviation industry, splitting these into chapters titled: Looking forward to tomorrow’s world, Business continuity – ensuring a solid business model, Avoiding unnecessary disruption, and Navigating the given external considerations.
U.S.-based partner and fellow co-chair of Reed Smith’s aviation group Oliver Beiersdorf added: “I am delighted to share our new thought leadership campaign from lawyers in our aviation group on the back of what has been a very difficult period for the industry. This campaign has been designed to help alleviate concerns that our aviation clients may be having, and raise key insights on opportunities, challenges and uncertainties that are timely and topical.”
Simon Spells, who leads the aviation practice in Asia for Reed Smith, said: “The freighter market has been a focus sector for many of our clients over the past 24 months, and our experience across the breadth of our aviation group has provided us with unique insight into some of the key dynamics currently driving the changes in the air freight industry. We hope the report helps industry participants by providing them with the benefit of our experience and insights on those current key dynamics.”
Reed Smith’s global aviation team is made up of more than 40 industry practitioners spread across the firm’s offices in the United States, Europe, and Asia and is a single interconnected global team whose members work together on transactions across offices and time zones.
With a deep knowledge of the aviation industry, the firm provides legal services to a broad spectrum of clients ranging from lenders and investors, arrangers, lessors, leasing companies, and export credit agencies, to airlines, operators, aircraft and component part manufacturers, as well as aerospace and satellite companies across the aviation and aerospace business life cycle.
To read the report, visit Reed Smith's Global Air Freight page.
About Reed Smith
Reed Smith is a dynamic international law firm dedicated to helping clients move their businesses forward. With an inclusive culture and innovative mindset, we deliver smarter, more creative legal services that drive better outcomes for our clients. Our deep industry knowledge, long-standing relationships and collaborative structure make us the go-to partner for complex disputes, transactions, and regulatory matters. Now celebrating more than 140 years of service, our firm spans 30 offices with 3,000 people, including 1,700 lawyers.
For more information, please visit www.reedsmith.com.
