The air freight market in Vietnam, which shows immense potential and is developing at a quick pace, is ripe for the entry of domestic airlines specialising in cargo.
Vietnam currently does not have any domestic airline specializing in cargo, but IPP Air Cargo, the country’s first all-cargo airline, is all set to become a market leader in the sector. Le Hong Thuy Tien – General Director of IPP Air Cargo, revealed that the company has converted four aircraft, and appointed key staff. “We hope to fly soon and are committed to serving the Vietnamese and FDI business communities, creating a sustainable foundation,” said Tien.
The Vietnamese air cargo market is currently dominated by 29 foreign airlines that operate cargo aircraft. Experts are of the opinion that state management agencies and Vietnamese enterprises need to focus on ensuring that domestic airlines make their presence felt in the rapidly expanding market.
According to the Vietnam Government Statistics Office, the Vietnamese freight transport market has grown substantially in the last three decades, with an output of 1.3 million ton in 2021 and an expected output of more than 1.52 million ton in 2022. The output is an increase of nearly 83 times compared to 1991 and 21.2% compared to 2019. The average annual growth rate from 1991-2022 is 15.3 per cent.
According to analysts, there is a lot of potential for growth of Vietnam’s air cargo sector. With the e-commerce industry booming and spurring the growth of the global air cargo sector, Vietnam is reaching out to become a manufacturer and supplier of goods and services, fashion supplies, food for the international market. A favorable geographical position as a place of logistics transshipment in the region adds to the advantages that Vietnam has as a potential major air cargo market.
The world aviation industry witnessed a serious decline in passenger transport when the Covid-19 pandemic occurred, but airlines around the world grasped the opportunity to exist and quietly developed the freight transport sector when the demand for transportation increased. Air freight shipments have skyrocketed, even though the pandemic is over.
During the pandemic, it was the ability to shift from passenger transport to freight transport that helped many airlines not only survive the pandemic but also make a profit. A prime example is Delta Air Lines, which achieved its highest quarterly cargo revenue ever, with a growth of 46% compared to 2019. Boeing has forecast that the global freighter fleet will grow by 80 per cent by 2041, and include 3,610 freighters.
According to a report by the International Air Transport Association (IATA)1, 2021 was a year of strong growth for freight transport with volumes growing by 18.7 per cent year-on-year, the best annual growth performance since 1990. Although the world was dealing with the pandemic, the need to transport equipment, medical supplies, vaccines, food and online purchases across borders created a habit for global consumers, contributing to the development of the e-commerce industry.
The latest Market Watch report states that the Air Cargo market size is forecast to reach 14.05 million tons by 2025, growing at a CAGR of nearly 5 per cent over the forecast period from 2022 to 2025.
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