IATA study: Air connectivity can improve trade by 6:1 ratio

The more connected you are with the world, the greater your ability to engage in trade – by a factor of 6 to 1. Those are the findings of a recent study released by The International Air Transport Association (IATA), which made a quantitative link between a country’s air cargo connectivity and global trade.

According to the results of the report, titled “Value of Air Cargo: Air Transport and Global Value Chains,” for every 1 percent increase in air cargo connectivity, countries studied in the report saw a 6.3 percent boost in trade activity.

“Air cargo is key in supporting the current global trading system,” concluded Brian Pearce, chief economist at IATA. “In 2015, airlines transported 52.2 million metric tons of goods, representing about 35 percent of global trade, by value. That is equivalent to US$5.6 trillion worth of goods annually, or US$15.3 billion worth of goods every day.”

The study – commissioned by IATA and conducted by Developing Trade Consultants – cited several factors that contributed to the connectivity/trade correlation, including legislative actions such as the ratification of the 1999 Montreal Convention to enable countries to adopt e-freight, as well as the World Trade Organization’s Trade Facilitation Agreement and the World Customs Organization’s revised Kyoto Convention to reduce complexity and costs of cross-border trade.

Other trade enhancements, such as the proliferation of electronic air waybill (e-AWB) and the implementation by governments of “single window” processing, also played a major role in improving trade via air cargo, the study found.

“Facilitating trade with efficient air cargo processes requires a strong partnership between governments and industry,” said Glyn Hughes, IATA’s global head of cargo. “Governments have the important role of implementing global standards and agreements to facilitate trade and make it possible for airlines to modernize processes. In turn, the industry needs to embrace these opportunities to improve competitiveness and provide customers with enhanced shipping quality, service and better predictability.”

For more information on the IATA “Value of Air Cargo” report, click here.