The Freight 50: Analysis of air cargo growth in 2017

Hitting the wall on growth

The last year has treated the industry well, but few who are familiar with air cargo’s cycles are particularly sanguine when it comes to predictions of a continuation in the future. While most of the recent tariffs that have been erected this spring and summer involve oceanfreight, some in the industry fear it could spread to the air sector as well.

Kensuke Tsuchida, with the profit management group at Japan Air Lines’ cargo and mail administration, said protectionism “has not yet affected air cargo demand or selling rate so far, but we find it potential risky.”

Finnair Cargo’s managing director, Janne Tarvainen, said the carrier is following the tariff situation carefully. “We are very concerned,” he said. “As IATA has already indicated, there are some signs of nervousness in the global market.”

But in general, the outlook is hopeful that some growth will continue, albeit much slower than we’ve seen in 2017.

Ethiopian’s Nigussie said trade wars will likely have an effect, but it may not necessarily be negative. “Trade wars have been happening at different times, but came with different opportunities,” he said. “We hope this current phenomenon would also bring its own opportunities, especially for Africa, by increasing trade volume between China and Europe, which have major trade relationships with Africa.”

“2017 was very good for air cargo, which grew faster than global trade,” said Tarvainen. “The market is still relatively good, but we have already passed the best upturn. Globally FTKs will still grow but the growth will slow down.”

Tarvainen also said Finnair is bracing for “more disruption in the conservative air cargo business,” but added that it will have more to do with digitalization than with tariffs. “We want to be ready and part of the disruption by investing in cutting-edge technologies and utilizing high-quality data.”

“One cannot expect a 2017 every year, although it would be great for the industry, and a fall in growth or reduction in demand will inevitably come,” said Cargolux’s Sigurdardottir. “The big question is when this is likely to happen. As the prospect of international trade wars intensifies and the application of tariffs on goods broadens, this will also have a dampening impact on demand.”

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