IATA: Air cargo outlook strong despite pandemic

Published October 13, 2021, 11:28 AM

by Emmie V. Abadilla

The outlook for air cargo in the short and long-term remains strong, International Air Transport Association (IATA) Global Head of Cargo Brendan Sullivan announced in the 14th World Cargo Symposium (WCS), which opened Oct. 12, 2021.

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“Looking towards the future, the outlook is strong. We need to maintain the momentum established during the crisis and continue building resilience post pandemic,” he underscored.

Indicators such as inventory levels and manufacturing output are favorable, world trade is forecast to grow at 9.5 percent this year and 5.6 percent in 2022.

E-commerce continues to grow at a double-digit rate, and demand for high-value specialized cargo – such as temperature-sensitive healthcare goods and vaccines – is rising.

In 2020, the air cargo industry generated $129 billion, which represented approximately a third of airlines’ overall revenues, an increase of 10–15 percent compared to pre-crisis levels. This year, cargo demand is expected to exceed pre-crisis (2019) levels by 8 percent and revenues are expected to rise to a record $175 billion, with yields expected to grow by 15 percent.

In 2022, demand will exceed pre-crisis (2019) levels by 13 percent with revenues expected to rise to $169 billion although there will be an 8 percent decline in yields.

However, “The surge in demand for air cargo and attractive yields are not without complications,” he clarified.

“Pandemic restrictions have led to severe global supply-chain congestion and created hardships for aircrew crossing international borders,” Sullivan pointed out.

In addition, resourcing and capacity, handling and facility space and logistics will be an issue.

“This will create further operational challenges for our industry that must be planned for now. But we have demonstrated resilience throughout the crisis and with that same focus we will overcome these challenges.”

Hence, the cargo symposium highlighted sustainability, modernization, and safety as key priorities for the industry post pandemic.

“Air cargo is a critically important industry.During the crisis, it has been a lifeline for society, delivering critical medical supplies and vaccines across the globe and keeping international supply chains open,” says Sullivan.

“And for many airlines, cargo became a vital source of revenue when passenger flights were grounded.”

Significantly, “The pandemic accelerated digitalization in some areas as contactless processes were introduced to reduce the risk from COVID-19 transmission.”

The biggest growth areas are in cross-border e-commerce and special handling items like time and temperature sensitive payloads.

Customers for these products want to know where their items are, and in what condition, at any time during their transport. That requires digitalization and data.

Still, nations need to facilitate trade.

“Frictions have increased across the world. And there are big political problems such as protectionism and vaccine inequality that will need time to resolve,” he elaborated.

“But we have agreed treaties that need ratification, like the World Trade Organization’s Trade Facilitation Agreement (TFA) which focuses on business and trade. Despite the political tensions we encourage countries to make good on their agreements,” Sullivan added.

As of today, 154 countries have ratified the agreement – 94 percent of WTO membership. Governments yet to ratify the TFA should do so, and signatory countries should implement it as soon as possible.

“The cost of inaction is high,” he warned. “Full implementation could boost global trade by $1 trillion per year, reducing global trade costs by an average of 14 percent.”

 
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