Can integrated trade survive in these protectionist times?

SINGAPORE – At IATA’s World Cargo Symposium (WCS), speaker Brian Pearce, chief economist at IATA, said at the “Enabling Global Trade” panel discussion that he thought the industry was “at a dangerous junction, because in many ways, I think the West is moving away from that model that is the integrated world that we were living in pre-financial crisis, where now governments are focused on ‘protecting.’”

“I think we will look back and see this period as aggressive unilateralism as a huge mistake,” he added.

The panel, which also included Chin Yau Seng, senior vice president, cargo, Singapore Airlines; Steven Polmans, head of cargo and logistics at Brussels Airport Company; and moderator Nick Careen, senior vice president of airport, passenger, cargo and security (APCS) at IATA, delved into the current international trade environment, and the barriers that are stalling the progress of the airfreight industry. Conversations revolved around the global theme of protectionist policy and the continued slog toward digitalization, both of which are considered prominent hindrances to growth in demand for airfreight.

Polmans said he agrees that trade disputes like Brexit and trans-Pacific tariffs are a concern for airfreight demand, especially between the E.U. and the U.K. “In the short term, there will be a big operational problem,” he said. “Everyone will be forced to solve short-term problems rather than looking for good opportunities for business,” which he said could affect countries’ overall GDPs.

But on a more positive note, he added that he doesn’t think that such policies will become a reigning theme. “What we have done in the last thousands of years is always working closer together,” he said. “We’re going to look back and see some small hiccups, and I think the rest is history.”

While some time was spent continuing to highlight the metaphorical black spot on the x-ray that is the effect of protectionist policy on the fluidity of cross-border trade, the panel agreed that air cargo still stands to benefit greatly from demand for the transportation of time-sensitive cargo, which encompasses both the booming e-commerce industry and the healthcare industry.

“I think air is always going to be the favored mode for high-value goods, particularly when manufacturers are creating just-in-time processes and the shift we’re seeing in retail,” Pearce said.

It goes without saying that air cargo and high-value products go hand-in-hand. Seng believes that shippers’ willingness to pay the premium cost for fast-transportation means that they should also be able to expect premium services.

“Increasingly, I think we have to, as an industry, continue to build up the confidence among shippers and forwarders,” Seng said. “The big elephant in the room is digitalization – [we have] to make things a lot more seamless … in order to improve the overall value proposition of air freight.”

So, on one hand, the industry’s move to digitalization could be its saving grace, in light of a protectionist trade environment, but its failure to do so could end up worsening the blow.