How to Start an Air Cargo Company
Air-freight traffic is expected to reach 62.4 million tons globally by 2020. Emerging trends such as air-cargo digitization and the demand for temperature-sensitive goods are driving this market forward. From small businesses to pharmaceutical giants, organizations worldwide rely on air-freight companies to transport their products. As an entrepreneur, you may start an air-cargo business as long as you have the financial and technological resources to break into this field.
Running an air-cargo business requires a good understanding of the industry as well as a local and global professional network. Consider focusing on a specific niche such as the transportation of medical supplies or military goods to gain a competitive advantage.
First of all, make sure you understand how this business model works. The terms "air cargo" and "air freight" are often used interchangeably, but they're not the same. Air cargo refers to the goods carried in an aircraft and comprises air freight among other services, such as airmail and air express. Air freight, on the other hand, is the actual carriage of goods by plane.
According to the International Air Transport Association, air-cargo companies transport goods worth over $6 trillion annually, accounting for more than one-third of world trade by value. This kind of business has the potential to save lives. Without it, pharmaceutical companies wouldn't be able to ship vaccines, medical equipment and drugs worldwide in a timely manner. Additionally, numerous products, including medications, require a temperature-controlled environment, and that's something cargo airlines can provide.
Pharmaceutical companies are not the only ones that use these services, though. Approximately 7.4 billion postal parcels are sent annually by airmail. These packages contain a variety of goods, from wine and Swiss watches to electronics, diamonds and even live animals. Air freight is the fastest means of transportation, making it ideal for shipping time-sensitive or high-value goods.
The first step in starting an air-cargo business is to gather information about the market, your target audience and your competitors. In 2019, global cargo airlines generated about $111 billion in revenue, with UPS Airlines, FedEx Express, Korean Air Cargo, DHL Aviation and Emirates holding the largest market share. In this industry, you'll compete against global, national and regional cargo airlines and maritime transportation providers.
In general, large air-freight companies use new aircraft to transport their goods. Smaller airlines typically use older aircraft that are not suitable for carrying passengers, such as the Airbus 300, Douglas DC-8 and Boeing 707. Some use modified turboprop-powered aircraft like the British Aerospace ATP or even military planes. Their services vary too; some airlines carry general cargo such as jewelry, while others transport special cargo, which requires certain storage conditions or temperatures.
Not all products can be transported by air. Explosives and flammable substances, firearms, power banks and other potentially dangerous goods are not allowed on planes. The shipping process itself is quite straightforward: As an air-cargo business, you will work with logistics providers and local carriers that will pick up the freight at your warehouse, transport it to the airport and load it onto a plane. Your carrier will arrange for handling, storage and delivery once the goods arrive at the destination airport.
Before getting started, you need to make a business plan that covers these aspects and others. Research the industry, define your target audience and determine what types of services you want to provide. For example, you may offer scheduled, chartered or express air-freight transportation or specialize in the delivery of certain goods, such as medical products. The key is to find a specific market to serve.
Consider your startup costs and capital requirements as well. To run this kind of business, it's necessary to have a plane or fleet of planes and build relationships with commercial carriers and logistics experts. If you're planning to operate internationally, you'll need to have contacts in the countries to which you ship. The legal requirements will vary too depending on whether you provide domestic or global delivery and the type of cargo in which you specialize.
Unless you'll operate the planes yourself, you don't need a pilot's license. However, you do need a general business license, an air-carrier and operator certification from the Federal Aviation Administration and licenses and permits for transporting specific goods. Also, make sure your pilots are fully certified and insured. Furthermore, your business plan should cover your mission statement, organizational structure, financial projections, objectives, marketing strategy and any legal requirements that may apply in your state.