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Five Questions With... Andrew Herdman

By Adina Solomon on May 2, 2013

Andrew Herdman is the director general of the Association of Asia Pacific Airlines. Air cargo carries less than 1 percent of the world’s tonnage but 35 percent of the value of international trade, he said. He spoke with Air Cargo World about the Asian air cargo industry, cargo security and how the environment factors into airfreight – a topic in which AAPA is active.

1. What is the outlook for the Asian-Pacific air cargo industry this year?

Asia carriers are heavily committed to the cargo business and represent about 40 percent of the global air cargo traffic, so when you say what’s the outlook for the Asian airlines and cargo, it’s pretty much the same as asking what’s the outlook for the global industry…The demand for cargo has totally flat-lined in the last couple of years, so the belly is absorbing a bigger proportion of that static cargo market, and as a result, the amount of cargo that’s needed in the way of dedicated freighter capacity is shrinking, so that’s putting people in a very difficult position, particularly all cargo operators, all those big combination carriers, including big Asian carriers who operate large freighter fleets. They’re having to reduce the number of freighters they’re operating, parking or retiring old aircraft, even if they’re adding new, more fuel-efficient 787-8 freighters or 747 freighters or so on. So the problem is right now is this surplus freighter capacity, and that’s making the economics of the cargo business very challenging.

2. What are the ramifications of the ongoing emissions debate for air cargo?

When the industry talks about its long-term growth potential, we have to be mindful of the fact that our emissions are growing, and that’s despite the fact that the industry is very strongly incentivized to be fuel-efficient because oil prices are high – roughly 35 percent of costs on average…Our traffic growth rate long-term is likely to exceed the pace of which we’ve improved efficiency, so it’s our view that there’s a role for some form of market-based measures, either emissions trading or more likely carbon-offsetting. The problem is that to put in place such a scheme, it’s not going to work to have every institute its own scheme for carbon pricing on aviation. We do need to get some global agreement.

3. What will the role of E-freight be in Asian-Pacific cargo?

If you look at the current attempts to switch to electronic Air Waybills, there are some examples from the Asia-Pacific. Some carriers are in the forefront of working with likeminded or supportive governments, particularly Cathay Pacific in Hong Kong. There are other examples of pushing ahead with moving toward electronic Air Waybill. And I think that gives a model on how the rest of the industry will go. But it does remind us of the fact that you need government involvement and government cooperation, particularly as far as customs information and the electronic flow of customs information.

4. What security trends have you noticed in air cargo?

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