Comment
Asia-Pacific leads cargo renaissance
November 1st 2014
Last month, the International Air Transport Association (IATA) released its latest five year industry forecast. It projected international freight volumes should increase at an annual compound rate of 4.1% to 2018, and that the fastest growing routes would be between the Middle East and Asia, at 6.2%. Read More »
In five years, six of the ten largest international air cargo markets will be in Asia. They will be China (2), UAE (3), Hong Kong (5), Republic of Korea (6), Japan (7), Taiwan (9) and India (10).
For those in the industry this good news has been a long time coming. Air freight business in the Asia-Pacific has been stagnating since the Global Financial Crisis in 2008 – except for a brief fillip in 2010. Dozens of big freighters were parked in the desert and several airlines closed their air freight divisions.
So it is a relief that air freight is showing strong signs of a turnaround, particularly in this region which is the source of nearly 40% of all cargo carried by air.
IATA statistics show that globally freight tonne kilometers (FTKs) rose 6.1% year-on-year in July and 5.1% in August. But the Asia-Pacific was ahead of the game with growth of 6.3%. The world’s largest air freight hub, Hong Kong International Airport, increased volumes by 8.6% in August. September, based on preliminary figures, has performed just as well. Even better, capacity expanded at the slower pace of 3.4%, which signaled easing yield pressure.
And airlines have begun reintroducing the parked freighters to their fleets. The air cargo market is growing in line with long-term rates. What comes as even better news is that despite a slowing economy China, responsible for 45% of the region’s air freight and a key to full long-term recovery, is performing well.
As Wang Zhiqing, deputy administrator of the Civil Aviation Administration of China (CAAC) told an International Civil Aviation Organization (ICAO) Air Cargo Development Forum in Zhengzhou in September (the first time the Mainland has hosted the gathering), that following a decline in cargo in 2011 and 2013 “we have finally come out of that in the first half of this year as domestic freight increased 5.7% and international 6.6%”.
Of course, nothing should be taken for granted given the volatile nature of the economies of the world, and cargo is no exception. The cargo industry is moving at two speeds. There may be strong growth in the Asia-Pacific, but the same isn’t true of Europe, where recovery is anemic. As IATA director general and CEO, Tony Tyler, pointed out, there may be more business confidence around, but there also is a long list of political and economic risks with the potential to affect business and consumer confidence.
But for now, at least in the Asia-Pacific, the future of air cargo is brighter.
