Quarterly Air Cargo Market Update: Part III
Future growth in air transport potential will originate to a large extent from emerging markets.
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Another sobering note was sounded when Airports Council International (ACI) released the latest edition of the World Airport Traffic Forecasts (WATF) 2016–2040 in Montreal last month, confirming that the weakened global economy and a sluggish global trade environment were definite deterrents to growth in air cargo volumes.
But Angela Gittens, Director General of ACI says irrespective of short-term fluctuations in the business cycle, future growth in air transport potential will originate to a large extent from emerging markets.
“Large population bases and increases in per-capita incomes in these markets are major forces driving this demand,” she says. “At the same time, microeconomic factors, which include heightened competition across the aviation sector and the increased presence of the ‘no-frills low cost’ business model among air carriers, will continue to stimulate demand with lower cargo rates.”
Gittens also maintains that there continues to be a structural substitution effect in the delivery of goods across modes of transport…even in the face of strong economic fundamentals.
“While the shipment of raw materials and perishables have been affected the most by a move away from air cargo services to ocean freight, the modal shift can also be seen in shipments of high-tech and machinery parts,” she says. “The largest trade flow from Asia has experienced the weightiest shift away from air cargo. So in the short to medium terms, global air cargo volumes are expected to increase modestly, in the realm of 2.4% on annualized basis up to 2025.”
Admittedly, says Gittens, there are several impediments that could curtail this forecast. Specifically, these are related to geopolitical unrest, terrorism and threats to security in certain parts of the world.
“Physical capacity considerations and potential bottlenecks in air transport infrastructure also pose challenges in accommodating future airport plans,” she says. “Finally, protectionist policies that retreat from further economic integration and transport liberalization could contract air cargo services.”
About the Author
Patrick Burnson, Executive Editor Mr. Burnson is a widely-published writer and editor specializing in international trade, global logistics, and supply chain management. He is based in San Francisco, where he provides a Pacific Rim perspective on industry trends and forecasts. He may be reached at his downtown office: [email protected].Subscribe to Supply Chain Management Review Magazine!
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