Air cargo emerged from the pandemic even stronger and more agile than before and is well positioned to support the global economic recovery and overcome future challenges, says IATA’s global head of cargo Brendan Sullivan
[This article first appeared in the Winter 2021 issue of Airline Cargo Management, which you can read in full here]
During the Covid-19 crisis, air cargo showed its value to aviation and the world at large. 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 revenues when passenger flights ground to a halt. In 2020, air cargo generated US$129 billion, which represented approximately a third of airlines’ overall revenues, an increase from a 10-15 per cent share prior to the crisis.
Air cargo responded to the challenges of the pandemic with innovation. Aircraft were reconfigured to carry cargo in the passenger cabin and freighter operations were expanded as best as possible. Safe new ways of operating were implemented, from accelerating digitalisation to expanding contactless processes to reduce the risk of Covid-19 transmission.
The outlook for our industry both in the short- and long-term is strong. Indicators such as inventory levels and manufacturing output are favourable, while world trade is forecast to grow at 9.5 per cent this year and 5.6 per cent in 2022. E-commerce continues to grow at a double-digit rate and demand for high-value specialised 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 per cent and revenues are expected to rise to a record US$175 billion, with yields expected to grow by 15 per cent. In 2022 demand is expected to exceed pre-crisis (2019) levels by 13 per cent with revenues expected to stabilise to US$169 billion although there will be an eight per cent decline in yields.
However, 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 issues.
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.
And it is with that same level of focus that we need to work together to make aviation sustainable, continue modernising processes, and become even safer.
Sustainability is our licence to grow. Shippers are becoming more environmentally conscious and 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.
At IATA’s AGM, 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.
The path from stabilising to reducing net emissions will require a collective effort. All industry stakeholders across the supply chain as well as governments must each individually take responsibility to address the environmental impact of their policies, products and activities. And they must work together to deliver sustainable connectivity and ultimately break aviation’s dependence on fossil fuels.
Modernisation and efficiency
The pandemic accelerated digitalisation in some areas as contactless processes were introduced to reduce the risk from Covid transmission. For example, the Indian Customs Administration established an automated release of import consignments through Electronic Data Interchange (EDI) throughout India, and several EU Member States started accepting electronic certificates instead of the original paper certificate.
We need to build on this momentum not only to drive improvements in operational efficiency but 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 digitalisation and data.
Programmes such as ‘Cargo iQ’, ‘Digital Cargo’, ‘Smart Facility’ and IATA’s overall cargo standards activity are helping to ensure the industry can optimise its processes to operate as efficiently as possible.
These are big projects and they are moving us in the right direction. But we need to continue working at the same pace as we did during the Covid crisis.
The third priority for our industry is safety. There is one area that needs to be addressed as a priority: the transport of lithium batteries. The safety concerns around this remain significant to us all.
Air cargo is a critically important industry. This pandemic reminded us of that. We make people’s lives better through trade and in the crisis we also recognised that we are saving lives. Globally we have delivered vaccines to 3.52 billion people worldwide.
We should always be guided by that fact – that the value we create by working together makes our world a better place. We are not just moving goods around; our work is helping build a better future for the people of the world. That inspiration guides me day-to-day. Let’s keep that in mind as we navigate the many challenges of our business and work together to make aviation sustainable, modernise our industry and become even safer to help build a more prosperous future.
Note: This feature is an edited version of Brendan Sullivan’s speech at the IATA World Cargo Symposium in Dublin, Ireland on 12 October.