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Middle class growth will boost air cargo

By control on October 22, 2013

By Adina Solomon

Growth of the middle class in China and other emerging economies will contribute to the future of air cargo, Des Vertannes says Tuesday.

Vertannes, global head of cargo at the International Air Transport Association, says in a conference call with media that as emerging economies begin to mature, the ballooning middle class will help air cargo.

“Whatever the situation, the opportunity for me is in the way the world trade is progressing and particularly the growth in the middle class,” he says.

Because of the huge populations of regions such as China and Latin America, the increase in the middle class will greatly affect airfreight.

“They don’t want to buy goods from China,” Vertannes says. “They want to buy goods from Europe or America.”

This will lead to a better balance in East-West air trade.

The air cargo industry often looks at world trade growth as an indicator of airfreight growth. Right now, Brazil, Russia, India and China are fueling the development in global trade. But Vertannes says the commodities being traded, such as oil and timber, are never shipped primarily by air.

That’s why he says air cargo’s growth lies with the middle class’ hunger for consumer goods.

Meanwhile, there are more and more megacities.

“These cities are putting a huge strain on themselves as they attract new citizens,” Vertannes says. “Trying to power them, clothe them, feed them, educate them – they’re going to need air cargo, I can tell you, because they’re not all residing near ports.”

He also discusses why the e-Airway Bill and E-freight are making slow progress, attributing it to regulatory framework, countries not embracing e-Customs and the plethora of platforms that forwarders and airlines use that don’t always communicate with each other.

“In these troubled times, airlines aren’t getting the board attention or support to upgrade their IT platforms, let alone anything else,” Vertannes says.

But he praises the resolution adopted by the International Civil Aviation Organization at its General Assembly in Montreal, which urges universal adoption of the Montreal Convention of 1999. This convention facilitates the use of paperless air transport documents.

Vertannes says the ICAO resolution will put renewed pressure on members to sign the convention.

He gives updates on Cargo 2000, saying by the end of 2014, IATA will put some neutral milestones in place for C2K members in order to eventually reduce the time of air cargo’s end-to-end performance.

C2K has 80 members, including airlines, forwarders and ground handling agents.

“What is considered a neutral milestone? How long after the goods arrive at any airport should the documents be made available to the freight forwarder?” Vertannes says. “We need the forwarders to tell us what it is. We need the shippers to say what they expect from the airfreight mode of transport.”

The air cargo industry frequently compares its growth to a historic trend of 4-5 percent annually. But Vertannes points out that airfreight hasn’t seen those numbers since the recession, except for a bounce-back in 2010.

But he remains confident in the airfreight industry’s outlook.

“Air cargo has got a good future,” he says.