Dive Brief:
- Southwest Airlines Cargo began its international shipping program this week, with the first shipment traveling from Houston Hobby Airport to Mexico City on Sunday, according to a press release.
- The airline plans to expand shipments to Cancun, Puerto Vallarta and Los Cabos by the end of the summer and other foreign destinations later.
- Air cargo has been a small but steady source of revenue for U.S.-based airlines, Dallas Morning News reports. Freight was less than 1% of Southwest Airlines' overall revenue in 2017, but it provides an opportunity to use aircraft more economically by loading shipments on the cargo holds of Boeing 737s.
Dive Insight:
It may not account for much in terms of Southwest Airlines' total revenue, but air cargo is a growing business opportunity.
By filling up the belly of passenger planes, Southwest can take advantage of over 4,000 flights a day during peak periods to help meet the demand for quick delivery.
The products that travel on aircraft are typically not the same going on ships or trains. By nature of its speed, air freight is more often used for shippers willing to pay a premium for a just-in-time delivery. CNBC reports Southwest plans to ship fresh-cut flowers, food products and pharmaceuticals with its new services.
It's for that reason the first four cities Southwest plans to ship to in Mexico are not traditional logistics powerhouses, but consumer ones. None of the four cities feature a major container port, for example.
But consumer demand is growing rapidly in Mexico, and with it, the country's need for a dense logistics network.
Air Cargo World reports major third-party logistics providers are planning expansions to the country. Swiss-based carrier Panalpina recently added Queretaro International Airport to its network, and SEKO Logistics is planning to open 20 warehouses in the country. Mexico City is preparing to build a vast new airport to handle both growing tourist and business demands in the country.
The need for air freight is not just growing in Mexico, however.
Market demand for air cargo accelerated far beyond available capacity in 2016, before slowing down earlier this year. Still, the world is facing a bit of a capacity crunch, which is being slightly abated by the growth of belly transport services like Southwest Airlines.
