IATA urges air cargo industry to work together

by Inside Logistics Online Staff

The International Air Transport Association (IATA) urged the air cargo industry to continue working together at the same pace, with the same levels of cooperation as during the Covid-19 pandemic to overcome future challenges and build industry resilience.

The call was made at the 14th World Cargo Symposium (WCS), which opened in Dublin on Tuesday.

“Air cargo is a critically important industry. This pandemic reminded us of that. During the crisis, it has been a lifeline for society, delivering critical medical supplies and vaccines across the globe and keeping international supply chains open. And for many airlines, cargo became a vital source of revenue when passenger flights were grounded,” said Brendan Sullivan, IATA’s global head of cargo.

“In 2020, the air cargo industry generated US$129 billion, which represented approximately a third of airlines’ overall revenues, an increase of 10 to 15 percent compared to pre-crisis levels. Looking towards the future, the outlook is strong. We need to maintain the momentum established during the crisis and continue building resilience post pandemic.”

Outlook

The outlook for air cargo in the short and long-term is strong. Indicators such as inventory levels and manufacturing output are favorable, world trade is forecast to grow at 9.5 percent this year and 5.6 percent in 2022, e-commerce continues to grow at a double-digit rate, and demand for high-value specialized cargo – such as temperature-sensitive healthcare goods and vaccines – is rising.

This year cargo demand is expected to exceed pre-crisis (2019) levels by eight percent and revenues are expected to rise to a record $175 billion, with yields expected to grow by 15 percent. In 2022 demand is expected to exceed pre-crisis (2019) levels by 13 percent with revenues expected to rise to $169 billion although there will be an eight percent decline in yields.

“The surge in demand for air cargo and attractive yields are not without complications. Pandemic restrictions have led to severe global supply-chain congestion and created hardships for aircrew crossing international borders. Resourcing and capacity, handling and facility space and logistics will be an issue. This will create further operational challenges for our industry that must be planned for now. But we have demonstrated resilience throughout the crisis and with that same focus we will overcome these challenges,” said Sullivan.

Sustainability

Sullivan said that sustainability is key to the industry’s growth. “Shippers are becoming more environmentally conscious and are being held accountable for their emissions by their customers. Many are now reporting how much their supply chains produce in emissions, and they are looking for carbon-neutral transportation options. We all need to meet customer expectations for the highest standards of sustainability. The path from stabilizing to reducing net emissions will require a collective effort,” he said.

At IATA’s Annual General Meeting last week, airlines committed to achieve net-zero carbon emissions by 2050. This commitment will align with the Paris Agreement goal for global warming not to exceed 1.5°C.

The strategy is to abate as much CO2 as possible from in-sector solutions such as sustainable aviation fuels, new aircraft technology, more efficient operations and infrastructure, and the development of new zero-emissions energy sources such as electric and hydrogen power.  Any emissions that cannot be eliminated at source will be eliminated through out-of-sector options such as carbon capture and storage and credible offsetting schemes.

Modernization

“The pandemic accelerated digitization in some areas as contactless processes were introduced to reduce the risk from COVID-19 transmission. We need to build on this momentum not only to drive improvements in operational efficiency but to meet the needs of our customers. The biggest growth areas are in cross-border e-commerce and special handling items like time and temperature sensitive payloads. Customers for these products want to know where their items are, and in what condition, at any time during their transport. That requires digitization and data,” said Sullivan.

IATA highlighted three major projects moving the industry towards digitization and the progress being made in each:

  • E-air waybill is at 75 percent now and is expected to achieve 100 percent by the end of 2022.
  • IATA’s ONE Record vision, enabling the whole supply chain to work together off one standardized and exchangeable set of data has 17 pilots in progress involving 145 companies and three customs authorities.
  • IATA’s Cargo XML messaging standards are being accepted by an increasing number of customs authorities.

IATA made three calls to action as well. It called for regulatory authorities (EASA and FAA) to accelerate development of a test standard  that can be used to demonstrate that fire containment pallet covers and fire-resistant containers are capable of withstanding a fire involving lithium batteries. It asked governments to step up and take responsibility for stopping rogue producers and exporters of lithium batteries, and it requested industry to step up and expand the collection of incident data and develop methods for the data to be shared to support the airlines’ safety risk assessment processes.

Trade Facilitation

“Frictions have increased across the world. And there are big political problems such as protectionism and vaccine inequality that will need time to resolve. But we have agreed treaties that need ratification, like the World Trade Organization’s Trade Facilitation Agreement (TFA) which focuses on business and trade. Despite the political tensions we encourage countries to make good on their agreements,” Sullivan said.As of today, 154 countries have ratified the agreement – 94 percent of WTO membership. Governments yet to ratify the TFA are urged to do so, and signatory countries should implement it as soon as possible. The cost of inaction is high. Full implementation could boost global trade by $1 trillion per year, reducing global trade costs by an average of 14 percent.