Why ULDs will continue to play key role in air cargo

Global air cargo demand increased 12 percent year-on-year in the first seven months of 2024 as a result of fast-rising cross-border e-commerce demand from Asia, disruptions in ocean shipping due to the Red Sea crisis, a broader general cargo demand increase driven by high-tech semiconductors for high-performance computing and the AI boom and a low comparison base from last year, according to the latest update from Xeneta.

All these cargo movements need unit load devices (ULDs) at the right places at the right time, drawing attention to the increased usage of technology in forecasting demand and ensuring availability for shippers. Volumes of parcels shipped by e-commerce via air cargo is seen at around 256 billion in 2027, an increase of 50 percent compared to 2022, and it can be understood why there is so much focus on the ULD industry, its challenges and outlook.

Added is the challenge of sustainability to ensure that movement of goods meet green demand in its multiple forms - shipments, transport and storage - where ULDs play a key role.

Last year, Jettainer was able to put the first fully certified fire-resistant containers into service for Lufthansa Cargo. The new units can contain a fire for up to six hours, making them the safest certified ULDs on the market.
-Jan-Wilhelm Breithaupt, CEO, Jettainer

"The market is currently characterised by global growth. More flight connections result in increased demand for ULDs," says Jan-Wilhelm Breithaupt, CEO, Jettainer. "We are prepared for this and work closely with our customers to ensure that the required ULD fleet is always in line with their needs. The big advantage is that as airlines’ partner, we can react quickly to fluctuating demand and avoid a situation where the business is negatively impacted by either too many or too few ULDs. Even though it is difficult to make predictions about the future in our volatile world, we remain optimistic for the coming months and beyond."

E-commerce will continue to grow, driven by the demand for speed and convenience, adds Bernhard Kindelbacher, CEO, ACL Airshop. "Same and next-day deliveries are now standard requirements. Companies like Temu, Shein and Amazon are major drivers of the e-cargo business. These are data-driven companies, and the air cargo and supply chain industries need to reach the same level of sophistication to capitalise on this growing market. Technological advancements, such as AI and supply chain technology, contribute to better inventory management, faster processing and scalability of air cargo for e-commerce. However, there are challenges to overcome, including capacity constraints, infrastructure limitations, and, most importantly, environmental concerns."

Safety is a key consideration for ULD manufacturers, shippers and air cargo carriers with the increasing use of lithium-ion batteries in e-commerce and general cargo. To improvise on existing regulations, the International Air Transport Association (IATA) has published the ULD Regulations Manual, which provides guidelines for the safe handling and operation of ULDs.

Zhi Yong Liao, Senior Manager, Cargo Safety and ULDs, IATA had this to say: "Although ULD handling for e-commerce shipments is similar to other general cargo and mail shipments without the requirements for specially designed ULDs, there has been an increasing trend that more and more airlines start to require that for e-commerce and airmail shipments, only ULDs with fire containment capability (e.g., fire resistant container (FRC)/ fire containment cover (FCC)) must be used."

The continued increase in demand for air cargo and e-commerce, indeed, stimulates market demand for more ULD procurement, and some airlines reported that the lead time for delivery has increased by almost three times, Liao added.

"Industry regulations as well as standards and procedures for cargo handling, including the handling guidance for dangerous goods and other special cargo such as live animals, perishables, healthcare products and human remains shipments, etc., have been well developed and maintained by IATA Cargo. ULD standards, including ULD handling guidance, has been positioned as one of the core IATA Cargo standards that is closely associated with and integrated into various cargo handling guidance when ULD is involved.

"IATA Cargo is open to any proposed modifications and changes in order to remain relevant to the changing industry by adapting to the changes in cargo operations and business requirements or improving the current standards and procedures if deficiency was identified.

"The current IATA standards are adequate for ULD handling but the emerging challenge is to promote ULD safety awareness and implementing ULD handling guidance, including ULD training requirements across the air cargo supply chain, especially towards freight forwarders, e-commerce logistics providers and shippers where there is an ongoing demand from those non-airline parties to perform ULD build-up at their own premises.

"This year, IATA Cargo developed a guidance document with the assistance of IATA Cargo Handling Council (ICHC) regarding the quality of shipper built ULD (SBU) and compliance to standards. The intent of the document is to raise safety awareness among air cargo stakeholders involved in the handling and build-up of ULDs, particularly the freight forwarding community.

"An SBU is a ULD prepared and built up by shippers or their agents (such as freight forwarders) rather than by the airlines or their ground handling services providers. An SBU is typically used to optimise cargo capacity and reduce costs by allowing shippers to pack and build up their goods in a way that is tailored to their specific needs.

"The document would address compliance challenges including training programmes, standards implementation by strictly following the IATA Cargo Handling Manual (ICHM) for all aspects of cargo handling (incl SBU) and incorporating necessary safety and security measures. The document will be released by the end of this year.

“ULD design and safety standards continue to evolve to meet the changing needs of the industry, particularly with the increased demand for shipping lithium batteries by air. This demand is likely to increase as we move closer to a world of net-zero carbon emissions and the need for larger volumes of energy storage systems. In order to meet the air transport industry’s increasing need to standardise the FRC/FCC minimum performance against lithium battery fire, IATA has been consulting with lithium battery shipping/ fire testing/ ULD certification experts and collaborating with SAE AGE-2 to update the fire testing standards for FRC/FCC by including lithium battery fire loads."

Breithaupt of Jettainer says: "The ULD industry is constantly evolving. As a ULD management company, we are in close contact with the manufacturers and collaborate with them to further improve containers, pallets and equipment ensuring that we can always offer our customers the best available options. For example, we worked successfully with one of our partners, ULD manufacturer Satco, on fireproof containers. Last year, Jettainer was able to put the first fully certified fire-resistant containers into service for Lufthansa Cargo. The new units can contain a fire for up to six hours, making them the safest certified ULDs on the market. In the area of fire-resistant lithium battery containers, IATA is still working on the development of a standard. This standard is key to initiating further developments in this area."

The ULD industry has developed fire-resistant containers specifically designed for transporting lithium batteries, adds Kindelbacher. "However, due to varying regulations and the evolving nature of the industry, it is challenging to establish a universal standard at this time. ACL Airshop is closely monitoring these developments and is committed to implementing the necessary safety measures to handle specialised cargo and dangerous goods effectively."

Tracking and tracing
The industry has seen the demonstration of automated and robotic technologies in ULD build-up as well as automation in aircraft loading and unloading of ULD, says Liao of IATA but adds that there is so far no sign of industry-wide adoption and implementation.

"The standard for the use of RFID technology for the automatic identification of ULD was developed in the 1990s but has never been picked up by the industry. Driven by the requirement for more efficient and accurate ULD control and tracking, major ULD leasing companies have started to install bluetooth low energy (BLE) tags on the ULDs since about six years ago, and today more and more ULDs including temperature-controlled containers (TCCs) are attached with tracking devices using various wireless technologies for data capturing purpose, which is one of the key elements for ULD tracking.

"Data sharing across ULD stakeholders is another key element for ULD tracking. IATA ONE Record has been introduced to the ULD community since early 2019 at various World Cargo Symposiums and ULDB meetings. In addition, the ONE Record Data Model for ULD tracking was developed by the IATA ONE Record team in collaboration with the ULDB, who defined the business requirements for ULD tracking.

"The implementation of ULD tracking using ONE Record data sharing standard continues to be challenging while many airlines are still using Cargo-IMP or Cargo-XML messages. The expectation is that with a target date of January 1, 2026 to set ONE Record as the only IATA effective data sharing standard, the ULD community needs to start preparing for change. IATA welcomes early adopters from the ULD industry and we will provide necessary support in pilot testing and implementation of ULD tracking using ONE Record data sharing standard facilitated by the use of wireless tracking devices attached to ULDs."

Implementing generative AI is part of ACL Airshop’s IT roadmap, and we plan to integrate it into our processes to improve efficiency, training and knowledge management.
-Bernhard Kindelbacher, CEO, ACL Airshop

Kindelbacher says ACL Airshop was one of the first to offer Bluetooth tracking and tracing of air cargo ULDs, and has made significant progress in developing related technologies and logistics innovations. "While integrating Bluetooth into every ULD is currently cost-prohibitive, we are gradually equipping more ULDs with these advanced tracking devices and exploring other digital solutions like GPS. Our focus remains on ULD control, which involves tracking and monitoring ULDs. Through our technology roadmap, we continue to invest in and develop our digital solutions, such as the FindMyULD app, to lead the industry in digital innovations.

“Implementing generative AI is part of ACL Airshop’s IT roadmap, and we plan to integrate it into our processes to improve efficiency, training and knowledge management. While we are not yet using generative AI on a large scale, we see its potential in automating repetitive tasks and enhancing decision-making processes, which will ultimately lead to better inventory management and faster processing times.”

Tracking the path that ULDs take in global networks is essential – not just for customers but also for the management process that needs precise data, adds Breithaupt. "This can be achieved in various ways. We equip our customers' fleets with BLE trackers as this offers useful advantages. However, the current BLE trackers are dependent on the associated reader infrastructure, which sometimes reach its limits outside the warehouse or at least the airport.

"A smarter alternative – and this is our main focus at the moment – is the intelligent use of data that is already being generated in large quantities during freight and baggage transport, linking and processing it in a meaningful way. We are already using this approach, and thanks to our in-house IT solution JettWare, we know very reliably and precisely where our ULDs are located at airport level – so our customers can rely on ULD availability.

"This brings us also closer to our goal of making the journey of ULDs outside the airport more transparent. We are therefore currently developing and expanding APIs with customers and partners. These APIs are a smart way of handling data in order to improve operational efficiency and service quality.

"We are also preparing to adopt the IATA ONE Record standard for all areas of ULD management. By adding additional data from the handling process or the truck operators, we will enrich our knowledge base with more information. In doing so, it will allow us to provide our customers with additional valuable information."

Sustainability challenges
IATA is working on providing guidance to help air cargo stakeholders make informed decisions, in particular through the use of life cycle assessments (LCAs). Liao says: “We are also collaborating with the industry to provide guidance in reduction of single use plastic products in air cargo operations including ULD build-up with a focus on plastic sheeting, stretch wrapping and packaging. The objective is to enable a more circular approach to material use, product design and innovation, procurement policies, and appropriate waste management. IATA is working to incorporate recommendations on waste reduction into IATA standards and best practices.

"Additionally, IATA is committed to advancing circular economy models for ULD components by supporting the recovery, reuse, refurbishment and recycling of materials at the end of their lifecycle. This not only reduces environmental impact but also opens up cost-saving and business development opportunities. Collaboration across the industry is essential for achieving these circular economy strategies in air cargo."

Kindelbacher had this to say: "Sustainability has become a critical strategic imperative in the air transport industry, and ACL Airshop is committed to contributing to a greener, better world. For example, we provide lightweight aluminium pallets for lease, which are engineered to be thin but strong, reducing overall weight and thereby saving fuel and costs in the long term. In our internal operations, we have invested in an ultra-modern production facility in South Carolina that uses numerous lean techniques to enhance productivity, increase materials velocity, and reduce utilities waste. We also prioritise sustainable practices in the procurement of our materials and parts, ensuring that our suppliers meet specific environmental standards.”

Breithaupt adds: “Sustainability is a key driver of change and innovation for us, beginning with the efficiency of our ULD management service, which ensures that airlines are able to operate with fewer ULDs and that these are steered in a way that empty positioning flights are avoided. And of course, the units themselves also have a major impact. We utilise modern lightweight materials, not only with regard to the ULDs itself but also for straps and nets, to save weight and CO2. For airlines that are not our customers, we offer skypooling - a free online portal to balance out over - or under- stocks of ULDs."

The expectation is that with a target date of January 1, 2026 to set ONE Record as the only IATA effective data sharing standard, the ULD community needs to start preparing for change.
-Zhi Yong Liao, IATA

What next for ULDs?
IATA estimates the current market size of ULDs is about one million units with a replacement value of over $1 billion. "We expect to see the continued development of ULDs and cargo containment systems with improved fire containment capabilities and being manufactured from lighter, stronger materials," says Liao. "We are also expecting to see the continuing development of ULDs equipped with fire detection/ suppression systems and aircraft safety design innovations in fire detection and extinguishing.

"We also expect to see more innovative improvements to the aircraft TCCs by providing much longer protection time more efficiently and sustainably to meet the stringent requirements of the pharmaceutical industry.

"And we expect to see more pilot testing in ULD tracking by using wireless tracking devices attached to ULD for data capturing and using ONE Record standard for data sharing among stakeholders."

And here is an industry perspective from Breithaupt of Jettainer: “The ULD industry is experiencing significant transformation due to technological advancements, environmental regulations, and changes in logistics and supply chain dynamics. The future landscape of the ULD industry will likely involve new products and services shaped by these trends.

“Over the past 20 years, we have continuously improved our specialised services and are working every day to unlock further potential for improvement. We are convinced that by utilising new possibilities, such as the intelligent linking of data along the entire process chain, we offer a highly attractive service for airlines not only today, but also in the long term.”

Kindelbacher of ACL is bullish on the global ULD market, which is expected to experience significant growth over the next five years despite global economic challenges resulting from multiple wars and pandemic-related disruptions. "The anticipated increase in air cargo and air travellers is the main driver behind the growth of the ULD market. With air travel approaching pre-Covid-19 levels and a significant rise in global air traffic, there is a growing demand for efficient ULD solutions to handle the increasing need for baggage and cargo shipments. ACL Airshop plans to expand its global presence and continue investing in technology to lead this evolution. We expect that by 2029, our operations will be fully integrated with advanced digital tools, providing our customers with unparalleled efficiency and sustainability in ULD management."