But industry dragging its feet in embracing new technologies.
Air cargo players are very positive on the industry outlook for the next few years but continue to drag their feet in embracing new technologies.
These were two of the main takeaways from the recent TIACA Air Cargo Forum (ACF) in Toronto, according to the trade body’s chairman, Sebastiaan Scholte.
At one plenary discussion session he had chaired on ‘Global Trends and Outlooks’, where he was joined by a panel of experts from Boeing, Airbus, Seabury and WorldACD, Scholte used the audience interaction tool, Slido, to ask everyone present – more than 100 people from across the air freight sector – whether they thought the industry would continue to grow over the next three years. “More than 90% said ‘yes’, so that was quite upbeat,” he told Lloyd’s Loading List. “The panel also all agreed.
“I personally think that in the next three years, there is a risk of a downturn again, as some recent media reports have highlighted, but in general, the industry was a lot more positive (about the future) than I expected.”
He said the impact e-commerce was having on air cargo and the expectation that it would continue to grow was a significant factor in creating the upbeat mood, while any fears of an economic crisis around the corner were played down, the general feeling being that if it did come about it would be nothing like what the industry faced in 2008-2009.
“Nor did delegates seem unduly worried about the current trade tensions between the US and China and the prospect of a new round of tariffs from January. Brexit might be more of an issue next year. The view seems to be that air cargo market between China and North America is only a small part of global trade.”
Scholte doubted whether Trump’s spat with the Chinese would lead to a significant shift in supply chains.
“First of all he (Trump) could be bluffing and in six months time things could be back to normal. So if you’re a big manufacturer, it’s maybe best to wait and see. If you look at the kind of products affected by the import duties and also the fact that the duties are levied on the cost price rather than the retail price, to a certain extent the hikes could probably be absorbed by the manufacturer, with end-consumer paying a little bit more on their side.”
Turning to the current market conditions in air cargo, Scholte questioned whether there was a real slowdown in demand emerging, as some market observers have suggested and who point to the tardy peak season as evidence of this.
“I think it is more a case of the strong rate of growth that was triggered in the second half of last year has slackened,” he said.
However, he admitted that while there were signs of the peak season gathering momentum, it was not as strong as last year, when a sustained surge in cargo led to things getting out of hand. “I am not saying it is going smoothly everywhere, but it is more manageable this time round and people are also a lot better prepared than a year ago,” he noted.
Scholte said there appeared to be little fear of a repeat of the predicament the industry found itself in last year of congestion and disruption at cargo ground handling operations at a number of European airports, notably Frankfurt, which led to trucks being delayed for up to several days in some cases.
As for the drag in the adoption of new technologies, Scholte said this came into sharp relief at another ACF discussion session where a survey of the audience revealed that more than 90% were not ready for ‘paperless’ air freight, despite it being a key element in TIACA’s transformation strategy for the industry for a good number of years.
Asked why he thought there was an apparent lack of commitment to technological change, he replied: “I think part of it is due to the fact that we are pretty inward looking in general. The air cargo industry is made up of so many different players with so many different SOPs (standard operating procedures) and who are used to doing things in their own individual way and for whom the transparency offered by digitalisation and moving to electronic documents and blockchain, for example, is not viewed as a priority for various reasons.”
Another factor was cost-related. “You have to invest in order to improve your performance in the future, and not everybody is ready to do that, being so caught up with the day-to-day challenges of running the business and making a living,” Scholte noted. “But there is a lot of technology out there that we are failing to embrace, and that’s a pity”.