Commentary: Air cargo’s re-emergence?

E-commerce growth and continued developments in specialized markets like the pharmaceutical industry will only serve to bolster air cargo growth, according to Alexandre de Juniac, director general at the International Air Transport Association.    In February, airlines based in North America carried nearly 6 percent more freight than during the same period in 2016, a fairly significant increase in an industry that has been marred by an alternating pattern of incremental progress and cargo malaise. The numbers, released in early April by the International Air Transport Association (IATA), show renewed vigor in the cargo market, but IATA representatives are still careful to express “cautious” optimism.
   The North American carrier uptick, part of an 8.4 percent total increase in worldwide tonnage, may represent the beginnings of a re-emergence for air cargo. The growth coincided with a tightening of capacity (down 3.1 percent from February 2016) and increasing cargo yields. IATA officials point to the strong U.S. dollar and increased traffic to Asia as the main reasons for the increase in volumes.
   Riding this wave of positive air cargo news, the Federal Aviation Administration has predicted airfreight revenue ton miles will increase 3 percent each year for the next two decades.
   According to the FAA, combined U.S. carrier air cargo revenue ton miles, which include mileage from freight and mail shipments, will rise from 2016’s total of 35.5 billion to more than 66 billion in 2037. Domestic airlines operating both within the United States and internationally will see domestic cargo rise 1.3 percent annually and international traffic increase by nearly 4 percent per year during that time.
   The cargo fleet will grow 1.2 percent each year, topping out at 1,044 planes in 2037, according to FAA estimates.
   In mid-March, at the World Cargo Symposium in Abu Dhabi, IATA Director General Alexandre de Juniac admitted his cautious optimism about the state of cargo is a rare feeling.
   What’s leading to this somewhat sunny outlook?
   According to de Juniac, exports are being set aloft after years of flatlining global trade figures. E-commerce growth is also helping boost air cargo, because online sales rely heavily on the expeditiousness of airfreight shipments. Looking ahead, the continued growth of specialized markets like the pharmaceutical industry will only serve to bolster this growth, he said.
   The IATA boss seemed to imply that although things look good now, fortunes can change in an instant. The delivery of large passenger planes to satisfy ticket demand, for example, increases cargo capacity exponentially, a serious problem in an industry where cargo yields are still on shaky ground.
   During his speech, de Juniac emphasized the need for the free and open flow of goods across international borders.
   “Aviation is the business of freedom,” he said. “The industry is premised on borders that are open to people and trade. That is at the heart of the important role that we play in globalization.”
   De Juniac also made a pitch for paperless processes in air cargo, a quest IATA has been pursuing for a decade, telling the audience that customers are tired of “16th century” paper processes. This is, of course, easier said than done.
   “I am sure that for all of us, e-freight is taking far longer to implement than anyone would have thought or hoped for,” he said.
   De Juniac did note that nearly 50 percent of global customers are equipped with e-air waybills, which he sees as quite a milestone. The expectation is to raise this number by 12 percent by the end of 2017.
   Meanwhile, the International Civil Aviation Organization has been making news of its own. In early April, Olumuyiwa Benard Aliu, the council’s president, outlined steps the airline industry needs to take to achieve better security in an increasingly deeply connected world, laying the groundwork for a forthcoming Global Aviation Security Plan document for all ICAO members. The organization hopes to release the plan at the end of the year.
   During the ICAO’s first-ever Cyber Summit and Exhibition, Aliu said “threats are emerging at an ever-increasing rate,” making the need for a global security framework paramount.
   While members agreed at the last assembly to address the cybersecurity threat, ICAO intimated that security efforts since then have been varied. A comprehensive, measured plan is needed to make progress on this threat, but a unified set of standards might be a ways away because “we are still at too nascent a stage to determine appropriate and practical standards,” Aliu said.
   “The basic interconnectedness we have all grown accustomed to in our day-to-day digital lives is now also a basic characteristic of on-board and ground-based aviation systems,” he said. “This makes them potentially vulnerable to outside cyberattack and explains why the logical or physical segregation of safety critical systems is a crucial first step for global aviation.”
   While global trade challenges persist, and new threats emerge seemingly every day, the short-term prognosis for the airfreight industry seems good. And as companies like UPS introduce Saturday shipping and other new tools to handle the inexorable rise of e-commerce sales, perhaps air cargo will once again regain a strong, stable foothold in the global supply chain.