The Market
Regional Air Freight: Potential waiting for new tech to unlock
A clear market need for these improvements exists, as demonstrated by both competitors and potential customers. First demonstrated by sustainability commitments and major innovation initiatives from freight integrators like DHL (committing to significant GHG emission reductions, fleet electrification by 2030, and net zero by 2050) and UPS (committing to halving GHG emissions by 2035 and achieving net zero by 2050). Further evidence includes regional cargo operator fleet upgrades and Letters of Intent/Memoranda of Understanding with aircraft startups, such as Alpine Air Express's LoI for 75 Aura Aero hybrid aircraft and Ameriflight's commitment to 20 Natilus BWB cargo aircraft and 35 Sabrewing cargo drones. The biggest differentiator in this market is cost as all carriers and aircraft achieve the same delivery time.
Market size breakdown by economic region.
Data from Form 10-K filings and flight data
Our aircraft will reduce operating costs by 40-50% and allow us to undercut existing regional carriers while maintaining high margins. In the regional air freight market most of the customers are freight integrators like UPS, FedEx, and DHL delivering hub-to-spoke freight. Typical prices are between $3K and $4K per ton and are either purchased as discrete route contracts or by mass and distance. This business is concentrated at a number of regional hubs around the world. As an example, Alpine Air Express receives approximately $12M in revenue from their operations at the Billings, MT hub. The North American market ships approximately 500K Tons of parcel air-freight per year. At $3500 per ton, the North American market is around $1.8B and the worldwide total addressable market is around $4.2B. This market is growing at around 4-5% per year.
Our implementation of autonomy, reduced shipping costs, and system integration will enable us to take market share from regularly scheduled truck-freight such as warehouse fulfillment for retail and e-commerce. This market expansion opportunity represents around 10-15% of the $900B truck-freight market for a TAM of $100B. For example, a study by North Dakota State University predicts that in rural regions like Richardton, Iowa. The delivery of electronics, currently truck-borne, could be achieved by large cargo drones for significantly reduced cost.
Estimated delivery costs via cargo drone for electronics in Rural Iowa.
Bridgelall R. Spatial Analysis of Middle-Mile Transport for Advanced Air Mobility: A Case Study of Rural North Dakota. Sustainability. 2024; 16(20):8949. https://doi.org/10.3390/su16208949