Air cargo must maintain momentum

The air cargo industry must continue working together at the same pace, with the same levels of cooperation as during the COVID-19 pandemic to overcome future challenges and build industry resilience. Sustainability, modernization, and safety were highlighted 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. In 2020, the air cargo industry generated $129 billion, 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," said Brendan Sullivan, IATA's Global Head of Cargo.

The outlook for air cargo in the short and long-term is strong. Indicators such as inventory levels and manufacturing output are favorable, 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 specialized cargo, such as temperature-sensitive healthcare goods and vaccines, is rising.

This year cargo demand is expected to exceed pre-crisis (2019) levels by 8% and revenues are expected to rise to a record $175 billion, with yields expected to grow 15%. In 2022 demand is expected to exceed pre-crisis (2019) levels by 13% with revenues expected to rise to $169 billion although there will be an 8% decline in yields.

"The surge in demand for air cargo and attractive yields are 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. But we have demonstrated resilience throughout the crisis and with that same focus we will overcome these challenges," said Sullivan.

Meanwhile, 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 stabilizing to reducing net emissions will require a collective effort," said Sullivan.

Digitalization will also be important not only to drive improvements in operational efficiency but also 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 digitalization and data," said Sullivan.

IATA highlighted three major projects moving the industry towards digitalization and the progress being made in each:

• E-air waybill penetration is at 75% now and is expected to achieve 100% by the end of 2022.
• IATA's ONE Record vision, enabling the whole supply chain to work together off one standardized and exchangeable set of data has 17 pilots in progress involving 145 companies and 3 customs authorities.
• IATA's Cargo XML messaging standards are being accepted by an increasing number of customs authorities.

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. But the incident on the ramp at Hong Kong International Airport earlier this year reminded us just how big the challenge is. The investigation indicated that loading and handling was as per regulation and the consignment was declared correctly," said Sullivan.

IATA called for:

• Regulatory authorities (EASA and FAA) to accelerate development of a test standard that can be used to demonstrate that fire containment pallet covers and fire-resistant containers are capable of withstanding a fire involving lithium batteries.
• Government authorities to step up and take responsibility for stopping rogue producers and exporters of lithium batteries.
• Industry to step up and expand the collection of incident data and develop methods for the data to be shared to support the airlines' safety risk assessment processes.

In terms of trade facilitation, frictions have increased across the world. And such political issues as protectionism and vaccine inequality 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," said Sullivan.

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. 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%.