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Top 4 Cargo Facts predictions for 2019

Caryn Livingston by Caryn Livingston
December 31, 2018
in E-Commerce, News
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To all of our readers, Happy New Year, and our best wishes for a productive and prosperous 2019! As a prelude to what we are sure will be a busy first half of the year — at Cargo Facts as well, with the launch of our new innovation-focused Cargo Facts EMEA event in Frankfurt, 4-6 February, and at Cargo Facts Asia 2019 in Shanghai, 15-17 April — we offer our thoughts on what may be ahead for the air freight industry in 2019.

#4: E-commerce, cross-border and otherwise, will continue to drive air freight.

It was a busy fourth-quarter for the world’s e-commerce giants, JD.com, Alibaba, and Amazon. On 5 November, JD launched dedicated freighter service with Tianjin Air Cargo through a collaboration agreement signed with HNA Group in March. Then, in December, Alibaba’s logistics affiliate, Cainiao, signed a cross-border cooperation agreement with Volga-Dnepr group, and Amazon agreed to lease an additional ten 767 freighters from Air Transport Services Group. With so many investments from e-commerce giants and major integrators – including  FedEx, which in December filed permit applications to further expand its facilities at Memphis (MEM) and Indianapolis (IND) international airports – we expect this trend will continue in 2019.

#3: More 737 NG conversions on the horizon.

In our recent look at major conversion houses and programs, we noted that industry participants consider the successful 737-400 passenger-to-freighter conversion program to be in its sunset years, as feedstock has dried up. Following last week’s certification of the 737-800 Boeing-converted freighter from the Civil Aviation Authority of China, Chinese operators are now able to operate the converted freighter. IAI-Bedek also received CAAC approval for its 737-700BDSF conversion. Additionally, China Southern Airlines’ early 2018 agreement with Boeing, along with the carrier’s large fleet of potential feedstock, suggests airlines in China, including YTO Airlines, China Postal Airlines, and SF Airlines, will likely find a plentiful supply of feedstock to enter 737-800BCF and -700BDSF operations in earnest.

#2: Uncertainty surrounding global trade will put a damper on continued growth. It became clear during our first looks at cargo traffic in October and November that air cargo traffic halted the trend of rapid growth maintained during 2017 and early 2018. With a handful of outliers, carriers and airports are reporting mostly flat or declining traffic, year-over-year. Considering that the world economy only recently began to falter, a portion of the blame can be traced to concerns over protectionism, with Brexit and the ongoing trade war between the United States and China being the primary culprits.

As our sister publication, Air Cargo World, reported, the growing likelihood of a no-deal Brexit stands to be an impediment to the speedy movement of global trade usually expected by shippers opting for fast-but-expensive air freight. The US-China trade war is also giving air cargo operators pause, as an executive with a China-based carrier told Cargo Facts that, if the countries fail to come to an agreement within ninety days, it could have a significant impact on air cargo for the entire year, particularly for trans-Pacific traffic.

#1: Southeast Asia emerges as a growing alternative to China.

As every cloud has a silver lining, the US-China trade war is not necessarily a negative for all air cargo players. That is especially true for many Southeast Asian airports, which are seeing production of various goods shifting to the region south of China, thanks to rising manufacturing costs and increasingly volatile trade relations between the US and China.

According to the previously mentioned executive with the Chinese carrier, as manufacturing shifts to other Asian countries, intra-Asian air cargo traffic will “keep booming,” with rising demand from a growing Chinese middle-class for goods imported from Vietnam, Thailand, and the Philippines. The market has already seen carriers adding cargo flights to Southeast Asian countries, with Longhao Airlines’ service between Xi’an (XIA) and Hanoi (HAN) and the launch of Hub Airways from Janco Holdings for cross-border e-commerce volumes between Mainland China and Southeast Asia. We would not be surprised to see more carriers launch cargo service between Southeast Asia and China, Europe, North America, or other regions.

Tags: 737 NGBrexite-commercepredictionstrade wartrends
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