Cautious optimism

Alexandre de Juniac, Director-General and CEO, IATA

Alexandre de Juniac, Director-General and CEO, IATA

This World Cargo Symposium is meeting at a time of cautious optimism, which is far too rare in the air cargo industry. After several years of virtually no growth, we are starting to see demand pick up. Freight volumes began to grow in the second half of 2016. And the momentum is carrying over into this year with January demand rising nearly 7 per cent over the previous year. 

There are some positive forces supporting growth. Export orders are strong. That’s a welcome development after world trade has essentially flat-lined for the last several years. 

E-commerce, which depends heavily on air cargo, is growing at a double digit rate. The world continues to transform into a global cyber-store. Customers in the internet age are demanding almost immediate fulfilment of their orders. 

High-value specialised cargo is also showing great potential. The total global pharma market is expected to reach $1.12 trillion by 2022, creating significant opportunity for air cargo. A substantial part of this market is the transport of temperature-sensitive healthcare goods such as cold chain drugs and biopharma products - typically shipped by air. Currently $12 billion is spent worldwide on cold chain biopharma logistics. By 2020, it is estimated that this will rise to $16.7 billion. 

Of course, we all know that growth and profitable growth are very different concepts. And even though the year has started with some positive signs, we are still in a very tough business. Yields are under lots of pressure. Airlines are taking delivery of long-haul aircraft to meet growing passenger demand capacity. And each long-haul aircraft comes with a belly hungry for cargo. 

More broadly, we must all be concerned about the protectionist rhetoric that is spreading. Aviation is the business of freedom. 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 globalisation. 

We must also pay attention to what our customers are telling us. Two of the fastest growing and most profitable parts of the business are focused on meeting specific customer needs—e-commerce as well as time- and temperature-sensitive cargo. That’s proof that we are successful when we are able to understand customer needs and create products to satisfy them.  

Excerpted from a speech at the World Cargo Symposium in Abu Dhabi.

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