Hunting for growth
Searching for the pockets of potential growth in the air cargo sector can be a daunting task under present economic conditions, but that was the mission of a panel discussion held during The International Air Cargo Association’s Executive Summit and Annual General Meeting last month. Panelists offered intriguing regional observations about where growth may occur around the globe.
Africa, Asia and Latin America will continue to offer significant growth potential in the coming years, panelists say.
Issa Baluch, a Harvard Senior Fellow, author of two logistics books and chairman of Air Cargo Trader, a Dubai-based GSA, says Africa, with a projected average annual GDP growth of 6 percent over the next decade, will continue to be a source of growth for air cargo.
“There are challenges on this continent,” Baluch says. “You can’t just grab your wheelbarrow and go there and do business, but the potential is great.”
Baluch says Africa’s vast amount of arable land, which he describes as the “food basket of the world,” plus its immense natural resources, make the continent a prime location for continued air cargo growth.
“There are opportunities for our industry, but it’s a continent that needs solutions,” Baluch says.
There are many challenges involving the numerous governments in Africa and issues involving traffic rights and customs. Movement of freight from coastal cities inward can take weeks.
Shawn McWhorter, president of Nippon Cargo Airlines, Americas, stresses the continued importance of Asia. He says the region, which represents more than 47 percent of global airfreight tonnage, is projected to see a growth rate of 4.1 percent to 8 percent annually depending on the trade lane. China, which accounts for 40 percent of the trans-Pacific cargo market, will continue to dominate.
“China’s middle class continues to grow in importance,” McWhorter says. “It’s a huge untapped population that wants goods from around the world.”
Japan presents an opportunity as its economy stabilizes following implementation of government fiscal programs aimed at promoting growth. Developing markets such as Vietnam are also likely to stimulate air cargo traffic as manufacturers seek lower cost locales.
“There are huge opportunities going forward,” McWhorter says.
Latin America will continue to be a source of growth for the industry, says Jaime Alvarez, senior director of cargo and courier for Panama’s Copa Airlines. Panama, which serves as a transit stop for air cargo headed for destinations throughout Latin America, has an economic growth rate of 10 percent.
“We enjoy an easy-going customs system in Panama,” Alvarez says, noting that Panama is also home to the largest duty free zone in the region.
Alvarez says Copa gave up its freighters several years ago and is now focusing on smaller cargo, including courier service.
“Going for the courier market is not easy, but that’s where the money seems to be,” Alvarez says. “If you run the belly well, you can make a lot of money.”
Infrastructure improvements also bode well for Panama. Expansion of Tocumen International Airport is underway and options for expansion of the Panama Air Cargo Terminal are being examined.