Home' Asian Aviation : AAV April 2019 Contents 30 AsianAviation | April 2019
Cargo outlook dims
The International Air Transport Association (IATA) held its 13th World Cargo Symposium in
Singapore in March and attendees learned that this year the industry will see soft demand as a
result of some things being out of their control. Editor Matt Driskill checks on the data.
IATA TOLD PARTICIPANTS at the symposium that traffic growth
for the year will around 2 percent as trade wars between the US and
China, Brexit and “anti-globalisation rhetoric” will put a damper on
freight. IATA had issued an estimate of 3.7 percent growth in De-
cember. “Developments in the political climate are not going in our
favour,” IATA’s director general, Alexandre de Juniac, said.
Weaker global economic activity and consumer confidence led
to a 1.8 percent fall in global air freight traffic in January, marking
the worst monthly performance in three years, IATA said. In 2018,
air cargo traffic grew by 3.5 percent, which was well below the
extraordinary 9.7 percent growth during a re-stocking cycle in 2017.
“Air cargo markets contracted in January. This is a worsening of
a weakening trend that started in mid-2018. Unless protectionist
measures and trade tensions diminish there is little prospect of a
quick rebound,” said de Juniac.
Association of Asia Pacific Airlines director general Andrew Herd-
man was also on hand and said e-commerce remained strong but
slowing export orders had pushed down overall cargo demand. “ The
first quarter looks weak from a macro-economic outlook but as for
the rest of the year it very much depends on whether these trade
disputes drag on or whether there are some resolutions,” he said.
Cathay Pacific Airways, Air China and Singapore Airlines are
among the world’s top 10 cargo airlines. All three reported falling de-
mand for international cargo during January. “ The air cargo industry
continues to face challenges from the evolving world trade tensions,”
Singapore Airlines CEO Goh Choon Phong said in a Reuters report.
“ World trade is at a crossroads given the protectionist stance taken
by some parts of the world.”
Asian airlines have an outsized role in air freight, accounting
for nearly 40 percent of the global market because the region is a
manufacturing and e-commerce hub.
IATA called on governments and the air cargo industry to focus
on three priorities to accommodate the expanding demand for air
cargo and ensure the economic and social benefits of aviation can
be maximised. IATA said the industry should: Accelerate the speed
of process modernisation; Implement and enforce global standards;
and keep borders open to trade.
IATA said modernisation of industry processes “will be critical
to efficiently meet the doubling of demand expected over the next
two decades. And it is already being called for by customers of the
industry ’s most promising growth markets — e -commerce and
the transport of time- and temperature-sensitive goods such as
pharmaceuticals and perishables. The association also called for
faster progress on digitisation of the global supply chain and “more
effective use of data to drive improvements in operational quality”.
IATA also called for modernisation of air cargo facilities. “ The
e-commerce world is looking for fully automated high-rack ware-
houses, with autonomous green vehicles navigating through the
facility, and employees equipped with artificial intelligence and
augmented reality tools. The average cargo warehouse today is an
impressive sight. But there is a huge gap to fill,” said de Juniac. “ The
problem is not technology. The problem is the speed to market. It’s
exceptionally tough to drive change in a global industry with a huge
number of stakeholders where safety is top priority. But it is not
mission impossible. I challenge stakeholders to find ways to drive
critical change at the speed our customers expect,” said de Juniac.
IATA urged governments to ensure that global standards are
consistently implemented and enforced when necessary. De Juniac
highlighted examples such as global standards for the safe transport
of lithium batteries. “Global standards are being ignored by rogue
shippers. And governments are not enforcing the rules. In some
cases, we see more effort going into stopping counterfeit production
of Louis Vuitton bags than lithium batteries. Both need attention. But
lithium batteries are a safety risk. And we need governments to do
better at enforcement,” said de Juniac.
IATA urged governments to keep borders open to trade. “Protec-
tionism, trade friction, BREXIT and anti-globalisation rhetoric are
part of a genre of developments that pose real risk to our business
and broadly across the economies of the world. We need to be a
strong voice reminding governments that the work of aviation—in-
cluding air cargo—is critically important. Trade generates prosperity.
And there are no long-term winners from trade wars or protectionist
measures,” said de Juniac.
1% of industry FTKs in 2018 2Year-on-year change in load factor 3Load factor level
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