Wednesday 23rd Aug 2017 - Logistics & Supply Chain

Air cargo must adjust to shortening supply chains

Efficiency gains are critical to the air cargo industry in adjusting to shortening global supply chains and evermore competitive market conditions, Tony Tyler CEO of the International Air Transport Association, has warned.

IATA figures show that air cargo volumes, measured in freight tonne kilometres (FTKs), were up 2.2 per cent globally in 2015 – but lower than the 5 per cent growth recorded in 2014.

“2015 was another very difficult year for air cargo. Growth has slowed and revenue is falling,” said Tyler.

Tony Tyler, CEO of IATA.

Tony Tyler, CEO of IATA.

“In 2011 air cargo revenue peaked at $67 billion. In 2016 we are not expecting revenue to exceed $51 billion. Efficiency gains are critical as the sector adjusts to shortening global supply chains and evermore competitive market conditions.

“We have to adjust to the ‘new normal’ of cargo growing in line with general rates of economic expansion. The industry is moving forward with an e-freight transformation that will modernise processes and improve the value proposition. The faster the industry can make that happen, the better,” he said.

IATA noted that recent months had seen a modest improvement in the market after the weakness in the first half of the year.

Overall for 2015, the markets in Europe and North America, which together account for some 43 per cent of all air cargo, were flat. Asia-Pacific, accounting for 39 per cent of freight traffic, expanded by 2.3 per cent.

Strongest growth was in the Middle East, where volumes were up 11.3 per cent, while in Africa, growth was 1.2 per cent. The worst performer was Latin America which was down 6 per cent. The freight load factor (the percentage of available FTKs actually used) averaged 44.1 per cent in 2015 – down from 45.7 the year before.

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