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Air Freight Emerging from the Economic Crisis

Ulrich Ogiermann, TIACA

Ulrich Ogiermann, Chairman, the International Air Cargo Association (TIACA) explains why he believes air freight has a bright future: "The air cargo industry will emerge stronger than other transport modes”

Towards the end of 2008 and throughout 2009, the air cargo industry saw a dramatic downturn in volume, reflecting reduced spending in the wake of the global recession.

In 2010, the air cargo industry’s first goal must be to stop the bleeding from the wounds incurred in 2009. We may see some growth as the year progresses but it will be 2011 before there is a sustainable improvement, and forecasts predict that not until 2013/14 will we return to the market size we enjoyed in 2007 and early 2008.

The air cargo industry will take time to recover properly and must decide what it will do to make air freight more attractive to customers. I expect to see more volatility over the next 12 months because there are still many unknown factors and bubbles waiting to burst at any moment.

Emerge stronger

Ultimately, I believe the air cargo industry will emerge stronger than other transport modes. Manufacturers and other businesses will be more reluctant than ever to tie up vast investment in stock. I see this taking us back to the text book “just-in-time” manufacturing environment, which demands the speed, security and reliability that only air cargo can provide.

More cost-conscious companies have looked at near-sourcing: buying materials and products closer to their final production points in Europe and North America, and eliminating the logistics costs of imports from Asia. However, recent studies prove the reduction in logistics costs is outweighed by the increased cost of local production, where infrastructure and employment investment is greater. I do not expect this to have the negative impact on air cargo others have predicted.

One of the few positives to come from the recession is that companies everywhere are now ready to discuss any possibility that benefits their business and ultimately their customer. Previously some taboos left no room to maneuver. These have disappeared. There are no more kingdoms in companies that are protected at all costs. That is a positive shift in change management. Companies will leave behind anything that does not add value. 

Focus shift

The International Air Cargo Association (TIACA) has also shifted its focus to concentrate on other issues that could, if ignored, present a new wave of economic challenges to the industry. For example, we need to improve aviation security, safeguard the industry and ensure comprehensive cargo screening programs are achieved in the most cost-efficient way. These must be supported by new technologies, and cause as little disruption as possible to air cargo operators and customers. TIACA believes air cargo security policies must be threat-based, risk-managed, multi-layered and operationally consistent.

Other issues must be addressed, such as the requirement for new air traffic management systems and responsible ways to be greener. We must increase efficiency while protecting the industry against many of the myths about aviation’s impact on the environment, and support initiatives aimed at paperless trading, quality measurement and performance data for customers.

In terms of customs, there is an urgent need to reduce origin/destination delivery times to capitalize on aviation’s core speed-through-the-air advantage.
There are more challenges than opportunities right now. But I believe the opportunities will come, and the air cargo industry will be well placed to take advantage of them.

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