Making freight freight profitable after COVID-19
While the COVID-19 pandemic has forced the suspension of scheduled flight operations, it has provided an elixir for cargo freight, which has become a lifeline for many airlines.
In Africa, airlines like Kenya Airways and Ethiopian Airlines have leveraged cargo freight to keep some of their planes in flight and have generated revenues that have supported companies during the lockdown.
Medical supplies and equipment had to be moved and later the COVID-19 vaccine had to be distributed. This is why aviation handling companies in Nigeria recalled most of their workers during the lockdown and since then air freight has maintained a steady increase.
But industry experts fear that as the devastation of COVID-19 is managed effectively and the world returns to the pre-COVID-19 era, air cargo could start to experience a slump. To avoid this possibility, the International Air Transport Association (IATA) urged the air cargo industry to continue working together at the same pace, with the same levels of cooperation as during the COVID-19 pandemic to overcome the challenges. future and strengthen the resilience of the industry.
IATA highlighted this at the 14th World Cargo Symposium (WCS) held in Dublin, Ireland on Tuesday, and said sustainability and modernization are key priorities for the industry after the pandemic.
âAir freight is a critically important industry. This pandemic reminded us of that. During the crisis, he was a lifeline for society, providing essential medical supplies and vaccines across the world and keeping international supply chains open. And for many airlines, freight became a vital source of income when passenger flights were grounded. In 2020, the air cargo industry generated $ 129 billion, which represented about a third of overall airline revenues, an increase of 10-15% from pre-crisis levels. Looking to the future, the outlook is strong. We need to maintain the momentum established during the crisis and continue to build resilience after the pandemic, âsaid Brendan Sullivan, IATA Global Cargo Manager.
IATA said the outlook for air cargo in the short and long term is good, revealing that indicators such as inventory levels and manufacturing output are favorable as global trade is expected to grow 9.5% this year. and 5.6% in 2022., e-commerce continues to grow at double-digit rates and demand for high-value specialty goods, such as health products and heat-sensitive vaccines, is increasing.
âThis year, freight demand is expected to exceed pre-crisis (2019) levels by 8% and revenues are expected to hit a record $ 175 billion, with yields expected to increase by 15%. In 2022, demand is expected to exceed pre-crisis (2019) levels by 13%, with revenues expected to reach $ 169 billion, although there is an 8% drop in yields.
âSoaring demand for air freight and attractive returns are not without complications. The pandemic restrictions have caused severe congestion in the global supply chain and created difficulties for aircrews crossing international borders. Resources and capacity, facility handling and space, and logistics will be an issue. This will create other operational challenges for our industry that need to be planned for now. But we have been resilient throughout the crisis and with the same goal we will overcome these challenges, âsaid Sullivan.
Regarding sustainability, Sullivan said, âSustainability is the license to grow our industry. Shippers are increasingly environmentally conscious and are held accountable for their emissions by their customers. Many are now declaring how much their supply chains produce in emissions, and they are looking for carbon neutral transportation options. We must all meet customer expectations for the highest standards of sustainability. The path from stabilization to reduction in net emissions will require a collective effort. “
One of the positive effects of the COVID-19 pandemic is the advance it has made in the electronic processing of goods and services; that many stakeholders believe freight business could move online after COVID-19.
IATA noted that the pandemic has accelerated digitization in some areas as contactless processes have been introduced to reduce the risk of COVID-19 transmission.
âWe must capitalize on this momentum not only to improve operational efficiency, but also to meet the needs of our customers. The most important areas of growth are cross-border e-commerce and special handling items such as time and temperature sensitive payloads. Customers of these products want to know where their items are, and in what condition, at all times during transit. It takes digitization and data, âSullivan said.
Safety was highlighted as a priority for the industry, in particular the transport of lithium batteries.
âThe demand for lithium batteries continues to increase, as does the risk of lithium battery fires. Our main concern is accidents caused by dishonest shippers who misreport shipments. But the incident on the ramp at Hong Kong International Airport earlier this year reminded us of how great the challenge is. The investigation indicated that the loading and handling were in compliance with the regulations and that the shipment was declared correctly, âsaid Sullivan.
IATA therefore called on regulatory authorities (the European Union Aviation Safety Agency (EASA) and the United States Federal Aviation Administration (FAA) to expedite the development of a test standard. that can be used to demonstrate that fire containment pallet lids and fire resistant containers are capable of withstanding a fire involving lithium batteries.
IATA also urged government authorities to step up their efforts and take responsibility for stopping dishonest producers and exporters of lithium batteries.
He also called on the industry to intensify and expand incident data collection and develop data sharing methods to support airline safety risk assessment processes.