IG AirCargo and University of St. Gallen Release Air Freight Study Switzerland 2020

The Air Freight Logistics Study Switzerland 2020, commissioned by IG AirCargo and conducted by the Institute for Supply Chain Management at the University of St. Gallen (Responsible: Prof. Dr. Wolfgang Stölzle, Managing Director, and Ludwig Häberle, Project Staff), has just been published.

(Zurich/St. Gallen) The Air Freight Logistics Study Switzerland examines the significance of air freight logistics for the Swiss economy and highlights the services of air freight logistics players from various perspectives. Taking into account the customer perspective, their performance profile is presented in a European comparison focusing on the key topics of air freight market, digitalization, climate and environmental protection, as well as regulatory framework conditions. This leads to the following central findings:

Air Freight Market & Trends

The air freight opens up global sales markets for Switzerland, with the economic location of Switzerland significantly benefiting from good air transport connections. With the increasing importance of overseas markets in Asia and North America, air freight is system-relevant for the economic development of Switzerland and plays a crucial role in securing prosperity and jobs. By value, 50% of all exports (CHF 157 billion) left Switzerland by air freight in 2019. The value share of 82% of all exports in intercontinental transport emphasizes the high relevance of the transport mode air freight for accessing intercontinental markets.

The high average value of CHF 1,413 per kilo in exports in 2019 is considered a central characteristic of the transport mode air freight in Switzerland. The tonnage share of air freight in exports and imports is very low at under 1%. With nearly constant air freight volumes at Swiss airports over the past ten years, the average value of exports (+43%) and imports (+57%) handled by air freight has increased. Among industrial goods, the relevance of chemical-pharmaceutical products has further increased, accounting for 47% of all air freight exports in recent years. Machinery, medical products, and watches are also important export goods of Swiss air freight. A particular feature of the air freight location Switzerland is the high share of 70% of freight on passenger flights. While the export industry benefits from a dense flight network through the combination of freight and passenger services, airlines with departure/destination points at Swiss airports secure higher profitability for these flights, especially on long-haul routes.

Customer Perspective

Air freight transports are carried out jointly by shippers, freight forwarders, airlines, and ground handling agents and are closely linked to customs, security, and other authorities. Due to the complexity of air freight logistics process chains, specialized air freight forwarders usually take on the organization and execution of the processes on behalf of shippers. Therefore, it is essential to consider the perspective of freight forwarders within the framework of customer requirements. Short transport times over long distances, high safety standards for freight, and pronounced reliability through precisely planned transport processes are crucial criteria from the customer’s point of view for using air freight as a means of transport. Over 75% of Swiss freight forwarders primarily handle air freight through Swiss airports. Due to the good connection with the Swiss market through regular road feeder services, megahubs in the European vicinity offer an attractive alternative and pose direct competition for the air freight location. In international comparison, the three Swiss national airports are appreciated for their speed and reliability, as well as for their high safety standards.

Due to the high-quality products in Swiss air freight, appropriate infrastructure for special goods such as valuable cargo, temperature-controlled, and perishable goods is a crucial success factor for the air freight location. A challenge lies in the high cost level in Switzerland, especially for labor-intensive process steps. This affects the competitiveness of Swiss air freight logistics compared to other European airports. To compensate for the disadvantage of high costs, Switzerland can differentiate itself in European comparison particularly through quality. The digitalization of air freight logistics plays a strategically decisive role here. Given the complex process chains, the use of integrated platforms with uniform standards offers the potential for paperless shipment processing and seamless monitoring.

Digitalization

Regarding digitalization, increasing transparency and a higher degree of automation in shipment processing are central approaches in air freight logistics, with technological trends such as artificial intelligence and blockchain showing the potential to bring about structurally significant changes in a short time. Manual, paper-based processes currently entail significant administrative overhead and limit resource planning and data quality for all actors. Paperless processing is rated as important to very important by 69% of the surveyed freight forwarders. In a fragmented market without dominant market players, enforcing industry-wide standards is challenging. With the ONE Record initiative, IATA is shifting from document-centered to data- and process-centered air freight logistics, promoting electronic data exchange “end-to-end.” The overarching integration of all actors offers efficiency advantages compared to isolated solutions in the overall logistical view. The manageable number of actors and the small Swiss market provide good international opportunities to implement digitalization potentials across the industry and to build integrated platforms for the inclusion of all actors.

Climate and Environmental Protection

Commercial aviation accounted for 2.4% of global CO2 emissions from fossil fuel combustion in 2018. Of this, about 19% can be attributed to air freight. With 5.35 million tons of emitted CO2 equivalents, air traffic emissions in 2017 accounted for around 10% of Switzerland’s total CO2 emissions. Due to the increasing share of air traffic in global CO2 emissions and the projected further increase, the industry plays a special role in achieving international climate protection goals. CO2 has the strongest climate impact of all air traffic emissions, as it not only causes the highest emission share when burning kerosene but also lingers in the atmosphere for several decades. In addition to CO2 emissions, the climate effects of “non-CO2 emissions” such as nitrogen oxides, sulfur dioxide, hydrocarbons, and soot particles must also be considered.

IATA’s four-pillar climate protection strategy offers effective long-term approaches to reducing air traffic emissions, with technological innovations promising the greatest impact. Political support for alternative fuels represents a starting point for Switzerland to contribute to the ecologically sustainable development of aviation. Transport by aircraft causes the highest CO2 emissions per kilometer compared to all other modes of transport. Since the transport of air freight shipments is handled in conjunction with upstream and downstream transport on the road, the ecological footprint of an air freight shipment must be considered as a whole and not solely reduced to the transport by aircraft between two airports.

Regulatory Framework Conditions

Swiss air freight logistics benefits worldwide from extensive air traffic rights, which gives Switzerland a very high air transport connectivity for its size in international comparison. Restricted operating hours and the limited accessibility of Swiss airports due to the night and weekend driving bans for trucks, as well as the night flight ban, pose a challenge to the competitiveness of Swiss air freight, especially concerning international location competition with other European airports. In response to the COVID-19 crisis in 2020, the study is expanded to include an excursus on the focus topic of air freight in times of crisis to capture relevant impacts on air freight logistics and to make statements about the industry’s handling of the crisis.

Air Freight Logistics Study Switzerland 2020

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