Air Cargo Leaders: Roger Crook, Des Vertannes
The big push this year has been to achieve greater coordination across the cargo supply chain. The establishment of the Global Air Cargo Advisory Group as a powerful industry force has been key to that. Since we signed the agreement between the four main associations at the World Cargo Symposium in March, the GACAG has agreed on the terms of reference and work programs in four priority areas. I anticipate GACAG mobilizing the industry and achieving significant results in all areas of focus.
ACW: What are some of the biggest challenges you faced in 2011?
Vertannes: In my opinion, we faced two main challenges this year. The first is the security challenge. The foiled Yemen cargo bomb plot in October 2010 reminded us that security is an issue that can only be tackled collectively. It reemphasized the value of intelligence and a total-supply-chain approach. Our secure freight program works on that principle and IATA, along with the GACAG, has been working through ICAO to get states to adopt a similar approach.
The second challenge is efficiency. We need to enhance our competitiveness in a very tough global market. The air industry’s fuel bill will top $200 billion next year; we need to utilize every possible productivity gain. Fortunately, the expansion of e-freight is giving the industry a tool to do just that. Now, we must all step up and make it happen. We also need to make better use of existing trade lanes and accelerate growth on the market penetration we currently have.
ACW: What is the overall health of the global airfreight sector?
Vertannes: We’re seeing a clear weakening in airfreight, and I’m concerned about the economic turmoil in the eurozone. However, we have been impacted by other factors such as the earthquake and tsunami in Japan, the Arab Spring, high oil prices, commodity price inflation and the recent flood in Thailand. All these events have contributed to weakened global demand, so growth this year has been flat. This must be considered in the context of 2010’s exceptional post-recession bounce, but the negative downturn in the second half of this year clearly signals a need to exercise prudence. We all know that airfreight is a leading indicator of economic health, and in September we saw volumes fall 2.7 percent system-wide, with a notable 6.3-percent decline in the Asia-Pacific. Load factor is also down. For the entire year, airfreight is only up 0.1 percent, and although we are currently forecasting growth in 2012, I expect that to be slightly revised in our December forecast.
ACW: What are your other expectations for 2012?
Vertannes: From a policy perspective, IATA will be focusing on increasing acceptance of the e-airway bill as our part of the push to increase e-freight volumes. The industry can expect to see GACAG gaining momentum leading the e-freight goals, and I anticipate governments becoming increasingly committed to securing cargo across the supply chain. Another priority for IATA in 2012 will be modernizing the relationship between forwarders and airlines to boost collaboration. Still, I think 2012 will be a tough year. IATA’s forecast is for airlines to profit just $4.9 billion next year on a margin of 0.8 percent. I expect freight to become an even more important revenue stream for airlines, which is something we should all look to promote. Just imagine how much the industry could profit if we increased our modal market share by just 1 percent, from our present 2 percent of the global cargo market by volume.