Air freight to grow at slower pace over next 20 years

Air freight traffic has grown at 5.3 per cent annually since 1980. Today goods worth $6.4 trillion travel by air — that’s 35 per cent of all world trade by value.

The growth rate is expected to be 4.9 per cent for the next 20 years. This means by the year 2023 traffic will double, according to V.K. Mathews, Executive Chairman of IBS Software, based in Technopark here.

Minimal profit

However, the profit margins are going to be nominal, Mathews said while speaking at the IBS Air Cargo Forum held at Istanbul in Turkey recently.

IBS Software is a leading provider of solutions to the travel, transport and logistics sectors.

Held every six months, the IBS Air Cargo Forum brings together leading cargo airlines where experts debate how advancements in technology can be leveraged to optimise cost of operations and improve yields.

Airlines have no control over their biggest cost element, fuel prices, Mathews said. Capacity utilisation was less than 50 per cent, leading to yield erosion.

“These statistics need to be kept in mind as we devise strategies on how we conduct business going forward,” he said.

Supply chain

“We need to move on and make the best of a demanding situation. For 90 per cent of the time in the supply chain, the cargo is just waiting to be moved. This is where efficiencies need to come in.”

A digitised shipper-to-consignee process has to become the standard to not only shorten the delivery time but also reduce unit cost, Mathews added.

The two-day conclave in Istanbul saw the unveiling of the iCargo portal by IBS Software, which would enable greater adoption of E-freight.

The first phase of the portal is expected to be complete by November and the second phase by the next financial year.

At least 70 experts representing airlines such as South African Airways, Qantas, Hawaiian Airlines, Lufthansa, All Nippon Airways, Nippon Cargo Airlines and Turkish Cargo, attended the event.

Istanbul as hub

They discussed key issues shaping the global air cargo industry and shared insights on strategies to address some of the critical challenges facing them.

Gary Hoyle of South African Airways was appointed the new Chairman of the IBS Cargo Forum.

Meanwhile, Temel Kotil, Chief Executive Officer, Turkish Airlines, said in his address Istanbul was ideally positioned to be the global connection point for air travel within 10 years.

While Europe’s traditional airports were struggling to add travellers as weak economies hurt demand, Istanbul was racing ahead with double-digit growth, thanks largely to the success of Turkish Airlines.

Kotil said Turkish Airlines was one of the fastest growing airlines in the world and well-placed to have 120 million passengers and 450 aircrafts by the year 2023.

Source: http://www.thehindubusinessline.com/industry-and-economy/logistics/air-freight-to-grow-at-slower-pace-over-next-20-years/article5141007.ece