IATA has urged the air cargo industry to work, post-COVID-19, with the same levels of cooperation as during the pandemic.
Speaking at the 14th World Cargo Symposium (WCS) in Dublin, Brendan Sullivan, IATA’s global head of cargo, highlighted sustainability, modernisation, and safety as key priorities for the industry post pandemic.
“Air cargo is a critically important industry. This pandemic reminded us of that. 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. And for many airlines, cargo became a vital source of revenue when passenger flights were grounded,” Sullivan told attendees.
“In 2020, the air cargo industry generated $129bn, which represented approximately a third of airlines’ overall revenues, an increase of 10–15% compared to pre-crisis levels. Looking towards the future, the outlook is strong. We need to maintain the momentum established during the crisis and continue building resilience post pandemic.”
Outlook for air cargo
According to IATA, the outlook for air cargo in the short- and long-term is strong. Indicators such as inventory levels and manufacturing output are favourable, world trade is forecast to grow at 9.5% this year and 5.6% in 2022, e-commerce continues to grow at a double-digit rate, and demand for high-value specialised cargo – such as temperature-sensitive healthcare goods and vaccines – is rising.
This year cargo demand is expected to exceed pre-crisis levels by 8% and revenues are expected to rise to a record $175bn, with yields expected to grow by 15%. In 2022 demand is expected to exceed 2019 levels by 13%, with revenues expected to rise to $169bn, although there will be an 8% decline in yields.
“The surge in demand for air cargo and attractive yields is not without complications. Pandemic restrictions have led to severe global supply-chain congestion and created hardships for aircrew crossing international borders. 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,” said Sullivan.
“Sustainability is our industry’s license to grow. Shippers are becoming more environmentally conscious and are being held accountable for their emissions by their customers. Many are now reporting how much their supply chains produce in emissions, and they are looking for carbon-neutral transportation options. We all need to meet customer expectations for the highest standards of sustainability. The path from stabilising to reducing net emissions will require a collective effort,” said Sullivan.
“The pandemic accelerated digitalisation in some areas as contactless processes were introduced to reduce the risk from COVID-19 transmission. We need to build on this momentum not only to drive improvements in operational efficiency but to meet the needs of our customers. 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 digitalisation and data,” Sullivan said.
Safety was highlighted as a priority for the industry, specifically the transport of lithium batteries. “Demand for lithium batteries continues to rise as does the risk from lithium battery related fires. Our main concern has been around accidents from rogue shippers who miss-declare shipments,” said Sullivan.
“Frictions have increased across the world. And there are big political problems such as protectionism and vaccine inequality that will need time to resolve. 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 said.
As of today, 154 countries have ratified the agreement – 94% of WTO membership. Governments yet to ratify the TFA are urged to do so, and signatory countries should implement it as soon as possible, IATA says. The cost of inaction is high. Full implementation could boost global trade by $1 trillion per year, reducing global trade costs by an average of 14%.