“Uniting Air Cargo – Industry collaboration: setting the vision for the air cargo industry for the next new normal” was the title of the sixth and final webinar in the TIACA’s Digital Air Cargo Forum series, replacing the physical event that would have taken place in Miami, USA, in November. Featuring panelists from across the supply chain, from Shippers to Airports with Forwarders and Airlines in between, it took stock of the ending year, and discussed priorities for the year ahead.
“Whoever foresaw a global pandemic around this time last year, when we met in Budapest and wished each other all the best for the coming year, please raise your hand!”, Steven Polmans, Chair of TIACA’s Board of Directors, opened the floor with a review of 2020. “I think we can all agree, it has been a special year, where cargo has played a vital role.” He went on to sketch the key learnings: that we only as strong as the weakest link and therefore industry collaboration is vital, that the industry has shown itself capable of adapting to change and quickly when required, but also that if all processes had already been fully digital, there would have been less struggles and disruptions.
“For many, Air Cargo is the savior of aviation”
Steven Polmans underlined the crucial role that international air cargo played in the fight against COVID19, not only with transportation of PPE, but also in keeping economies and supply chains running, and for many an airline or airport, air cargo was “the only main flow of cash into the company;” a factor that has illustrated the importance of cargo and its essential frontline workers to those outside the industry, too. “And finally, very important: cargo today is higher on the agenda for everybody, from all stakeholders, airlines, airports, also governments.”
“A good old gradual recovery”
Niall van de Wouw, Managing Director, CLIVE Data Services, gave an economic re-cap, taking the audience through the figures illustrating air cargo development over the year, which CLIVE Data Services had indexed using the third week of JAN20 as its reference point. “There were many discussions going [over the year] on [whether it would be] a V-shaped recovery, W-shaped recovery, bathtub shaped recovery. All sorts of projections were made, yet from an Air Cargo point of view, it was less fancy. It was a good old gradual recovery that we've seen, month by month, six months in a row, now.”
A recovery that brings with it unprecedented dynamic load factor levels, which have hit 72% on three separate occasions to date already, with levels in the summer being even higher than even the impressive 2018 peak season. “We no longer have a peak season; we can speak of a peak semester that has been going on since APR20.”
Yet, the high load-factor is a result also of trade lane imbalances and ongoing capacity shortages, bringing with an explosion in rate levels with it.
“The unexpected can and will happen”
Looking forward to the year ahead, van de Wouw stated he could only give it his best bet, since the current year had shown that “the unexpected can and will happen,” and there were still a number of uncertainties, though “we do not expect that the movement of the COVID vaccines will disrupt the air cargo industry on a global scale.” The disruption there would more likely happen on the ground. The unknown variables in the vaccine situation, however, link to passenger demand, which he predicted would remain sluggish over 2021, thus the cargo capacity crunch would remain.
This, in turn, should lead to “cargo departments having a bigger say in how intercontinental routes will develop,” given that cargo is bringing the money in, yet shippers, forwarders and airlines would need to revisit their agreements, since “now we have a toxic mix of elevated rates and high volatility” – which is detrimental to business.
“Increased industry collaboration is a must”
Steven Polmans, in his 2021 outlook, concurred with that uncertainties would remain, capacity would be slow to recover, whilst e-commerce would speed up, as would digitalization as a reaction to the crisis. At the same time, he underlined the “opportunity to sustainably transform,” but also warned that “bankruptcies of airlines, airports, or handlers are to be expected,” thus “increased industry collaboration is a must to turn a crisis into opportunities.”
What are the priorities for the “new normal”?
Speaking on behalf of the Shippers, Denis Choumert, Chairman, European Shippers Council, pleaded for greater visibility and market stability when it comes to capacity and pricing, underscoring van de Wouw’s “toxic mix” warning. “Shippers have been painfully trying to adapt to the Covid situation by short-term planning and rescheduling of shipments, […] so let’s look for more stability in the market in 2021.”
Michael Rossell, Senior Vice President, International Relations and Corporate Secretary, ACI World, spoke of working on greater efficiency and collaboration with other parts of the industry, and lauding the close work with TIACA.
Stephane Graber, Director General, FIATA, pointed to 2021 being the year the economy would be re-launched, and stated that the focus should be on removing inefficiencies in order to build more resilient and sustainable supply chains. Turhan Ozen, Chief Cargo Officer, Turkish Airlines, and IATA representative, agreed, announcing the aim to “create more value for the final customer.” He hoped that volumes would further improve, though expected that the situation would only begin to stabilize from Q3/21 at the earliest.
Trust and Transparency
When asked about the two main topics the industry should focus on, the words “trust and transparency” were repeated as core to achieving more efficient, sustainable supply chains, and a more diverse, collaborative, and integrated industry overall.
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