As several of the respondents in this issue’s Outlook 2020 report (page 40) observe, there have been signs that business confidence and air freight demand could pick up in 2020, encouraged by the partial easing of the trade tensions between the US and China that had weakened business confidence and economic growth last year.
Weak growth in global trade in 2019 of just 0.9% and slowing GDP growth in manufacturing-intensive economies contributed to falling export orders, causing air freight tonnages to drop last year by around 4%, FTKs by just over 3%, average yields by around 7%, and overall global air freight revenues by close to 12%, according to estimates from IATA and WorldACD.
The Phase 1 US-China trade agreement raised hopes of a more stable economic environment this year, which was presumably one of the intentions of the White House in the run-up to this year’s US presidential elections. But forecasts are a tricky thing, as the arrival of the coronavirus demonstrates. Its ultimate impact on China and the global economy are as yet unknown, but it has already led to the extension of the lunar new year slowdown, the cancellation of air and ocean services, and disruption to supply chains.
The eventual recovery of Chinese manufacturing will most likely bring a boost to air freight. But in the long run, despite the latest uneasy trade truce between the US and China, there are indications that the US now views trade policy as a tool of national security that it will use to try to limit the strength of a country it perceives as a competitive threat, with implications for international supply chains.
Beyond the global economy, air freight stakeholders remain relatively positive in this issue of CAAS – not just for continuing growth sectors such as pharma, perishables and e-commerce, but also in the potential of new technology to increase efficiency, productivity and service levels.
As some of the discussions in the Digital Transformation (page 4) and Outlook 2020 articles highlight, the improving products and falling costs of IT, along with affordable and secure opportunities to share data in the cloud, mean there are no real barriers to finally accelerating progress with the digital transformation of the air freight sector and digital sharing of data – if air freight players and IT providers can do a better job of demonstrating the benefits. And there are several ideas about how to achieve that in this magazine.
