WCS 2018: Three scenarios for air cargo market growth
DALLAS – Industry-wide air cargo traffic growth is once again an invigorating subject. Despite the increase in protectionist rhetoric threatening robust global trade, evidence suggests that “nearterm geopolitical trends will not inhibit air cargo growth,” said Brian Clancy, managing director of Logistics Capital & Strategy (LogCapStrat), during Tuesday’s Plenary Session presentation at IATA’s World Cargo Symposium.
Clancy began by drawing the audience’s attention to a graph (below) produced by IATA’s latest five-year market forecast that illustrated three different forecast scenarios for freight tonne kilometer (FTK) growth over the next five years. With a baseline in red, a bearish continuation of post-financial-crisis growth in green, and a bullish return to pre-crisis performance in blue, Clancy asked the audience where they would place their wagers.
Although impending trade wars and the deterioration of multinational pacts like NAFTA dominate the headlines, Clancy argued that, at least in the case of the U.S., with Trump, “current rhetoric is nothing more than ‘Let’s Make a Deal.’” Clancy’s tone echoed that of IATA’s chief economist, Brian Pearce, who called most of the current proposed barriers to trade forms of “soft protectionism.”
Regardless of how much weight the rhetoric carries, Pearce told delegates, “Border modernizing procedures are critical to offsetting protectionism.”
Although much of last year’s record upturn was a result of cyclical restocking linked to economic recovery, a remaining portion of the growth lacks an explanation. LogCapStrat believes this growth stems from e-commerce, which in 2017 “reached critical mass.”
The next phase of e-commerce will be characterized by growth in the cross-border segment, which is just getting started. Clancy warned that infrastructure is severely underprepared, and that mustering up the political will to push through infrastructure improvements is critical. Revisiting the page four graph, which scenario do you support?
