IATA Projects Air Cargo Growth, but Industry Challenges Remain
Increased demand for cargo services is contributing to the second straight year of profitability for the airline industry, said the International Air Transport Association (IATA) on March 12 (here). Cargo demand is projected to rise by four percent in 2014, up from IATA’s earlier estimate of 2.1%. But major changes in the industry continue to challenge the air cargo business, it said. IATA hopes to confront these challenges by working to reduce transit times by up to 48 hours over the next several years, said IATA’s Global Head of Cargo Des Vertannes in remarks at the 2014 Cargo Symposium in Los Angeles on March 11.
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Traditionally, air cargo has grown at nearly the same rate as total world trade. But the air cargo industry is growing more slowly than normal, partly because of the “on-shoring” of production, said IATA in its announcement of projected industry profits. That trend toward on-shoring is being encouraged by protectionist measures and relative changes in production costs, like lower U.S. energy prices and higher Chinese wage rates, said IATA.
“Game-changing innovation is sorely needed in air cargo,” said Vertannes (here). “Our industry has been mostly stagnant since 2008,” he said. We face significant challenges in the areas of efficiency, security and sustainability, and the entire industry needs to commit to new innovative processes if we are to benefit from any economic upturn.”
Currently the average end-to-end time for consignments is around 6-7 days -- a schedule that has not improved since the 1960s, said IATA. At the Cargo Symposium, Vertannes urged industry to commit to reducing transit times in an effort to improve air cargo’s competitiveness (here). “Let’s commit to cutting up to 48 hours off the average end-to-end time of a consignment,” he said. “That would really make a difference to our value proposition. Faster delivery times, coupled with competitive quality benchmarking and more efficient processes, will enable air cargo to compete and win new friends and business.”