Introduction
The world has changed because the way people travel, do business, and tour various areas has increased demand for air transport. It has also increased the need for transportation of goods to multiple parts of the world. As a result, the air cargo industry has become more competitive than other means of transport. Businesses prefer using air transport because of its reliability and speed. Although the air cargo industry has enabled many companies to prosper, it is experiencing some downfall because of some challenges. This paper will provide you with the challenges the industry is facing.
Challenges faced by the air cargo industry
High fuel prices
The major challenge that the air cargo industry is facing is the high fuel prices, which are continuously increasing. The industry requires up to 1.27 barrels each day, which costs $70 per barrel. The industry is, therefore, spending a fortune of its income on operating its cargo system. The carrier fees charged by the industry cannot cover the fuel costs meaning that most companies in the air cargo industry are operating at a loss. The companies have tried to increase the fees, but it has become too expensive for their customers (Morrell, 2011) .
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The rise in fuel prices has been triggered by various factors such as high demand from China, India, and developing countries. There is also an insufficient refining capacity in oil-producing countries, thus forcing them to spend a lot in transporting oil from great distances to where it can be refined. Finally, there is no competition among fuel producers and political instability within the Middle East countries. If the price per barrel increases by $1, it will cost the air cargo industry up to $50 million (Morrell, 2011) .
Security Threats
Safety and security within the air cargo industry are concerned with both the malicious attacks and challenges associated with the management of hazardous materials. In 2006, there was a plan to blow up some passenger jets using liquid explosives hidden in luggage. It led to the arrest of 24 suspects in London. It was also discovered that the air cargo industry is used for smuggling drugs, goods, and firearms from country to country. For example, in Dubai, the major threat for the air cargo industry is the drug and human trafficking (Wilkinson & Jenkins, 2013) .
These threats led to a drop in the number of clients, which has forced the air cargo industry to develop measures such as thorough screening of goods to be transported by air. Digital tools have helped air freight transporters ensure that all customers and staff follow safety protocols and security best practices when transporting hazardous cargo and lithium batteries. The tools also ensure that all the personnel follows all the security measures put in place in both the destination and origin country (Wilkinson & Jenkins, 2013) .
Government Policies
The air cargo industry is just like any other business, which is guided by government policies. Following the security threats facing the industry, most governments have developed new policies and regulations to ensure the public is provided with proper security. These regulations and policies include safety regulations, environmental regulations, international regulations, and policies. They ensure things in the air cargo industry are in control, thus making the public feel safe (Tretheway & Markhvida, 2014) .
The policies and regulations are so many, which have raised some issues in the air cargo industry. Customers are experiencing delays in the industry which results from companies in the industry trying to prove that they are concerned with the security of the customers and their cargo. Customers are complaining that air cargo has become slower due to the security measures put in place. The companies are also experiencing an increase in operational costs because of the costs of security (Tretheway & Markhvida, 2014) .
Over-Capacity
Over-capacity is another major challenge affecting the air cargo industry as planes are currently not traveling full. The extra capacity is due to the growth in passenger air travel. The industry handles over a third of all the trade in the world. In the past years, the industry has experienced some challenges associated with over-capacity. Over a decade ago, the air cargo revenues provided 12% of the total airline revenues, while now it gives 9%. Digital tools can be used to optimize cargo load and also make it easy to identify back-haul cargo. It will increase the global demand for air freight to match capacity. Digitalization has led to some challenges like the disruptions of the air cargo industry by technology companies such as Amazon (Yeung & He, 2012) .
Trade Protectionist
The air cargo industry has fallen prey to various protectionist measures. Air cargo companies have experienced shrinking of their revenues because of reduced shipments of high-tech commodities such as the material used in just-in-time manufacturing, and semiconductors. The reduced shipment is as a result of US-China tensions. Also, Britain's exit from the European Union has affected the production activities of some companies. Asian air cargo operators blame failed harvests in the United States for the reduced shipments of foods, which is a major part of their business. Digital tools can assist the air cargo industry to respond to the sudden changes in the tariff regime and enable the custom clearance specialists to track shifting export and import laws. The digital tools cannot help in situations where there is a reduction in the overall trade volume that resulted from trade protectionism (Brooks, 2013) .
Conclusion
Although air transport has become a preferred mode of transport for many businesses, it has some challenges that affect their operations. The challenges include high fuel prices, security threats, government policies and regulations, over-capacity, and trade protectionist. As a result of these challenges facing the industry, it is important to use digital tools to improve the operations of air transport as smooth as possible. The digital tools will help the air cargo industry to develop strategies for dealing with the challenges, including other future challenges, thus improving the quality of service provided to their customers.
References
Brooks, M. R. (2013). International trade in manufactured goods. In The handbook of maritime economics and business (pp. 129-146). Informa Law from Routledge.
Morrell, P. S. (2011). The air cargo industry. Air Transport in the 21st Century: Key Strategic Developments. Ashgate Publishing, Farnham, UK, 235-251.
Tretheway, M. W., & Markhvida, K. (2014). The aviation value chain: Economic returns and policy issues. Journal of Air Transport Management, 41, 3-16.
Wilkinson, P., & Jenkins, B. (2013). Aviation terrorism and security. Routledge.
Yeung, J., & He, W. (2012). Shipment planning, capacity contracting and revenue management in the air cargo industry: a literature review. In Proceedings of the 2012 International Conference on Industrial Engineering and Operations Management, Istanbul.
