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Air Cargo Struggles to Compete with On-Shoring

In contrast to robust growth in passenger traffic, air cargo has been in the doldrums since 2010, according to the International Air Transport Association's Economic Performance of the Airline Industry report. IATA launched this report during its 70th Annual General Meeting in Doha, Qatar. The report outlines how air transport is adding value for consumers, the wider economy, governments and investors.

“Aviation is a catalyst for economic growth. Airline revenues now total 1 percent of global GDP and the industry will safely transport 3.3 billion people and $6.8tr worth of goods this year,” Tony Tyler, IATA’s director general and CEO, said. Global spending on air transport is expected to reach $746bn (548bn euros) in 2014, which equals 1 percent of world GDP. Employment supported by aviation has reached some 58 million jobs worldwide. In addition, airlines are making enormous investments in modernizing fleets. This year, the industry will take delivery of 1,400 aircraft. The soft air cargo market is mainly the result of the unusual weakness of world trade that is related to a parallel trend of company’s on-shoring production. Nonetheless, the strongest demand since 2010 is expected with a weaker-than-normal cyclical upturn estimated to produce 3.1 percent growth. But real freight rates are expected to fall four percent this year. The divergence in growth trends between weak cargo and robust passenger is creating challenges for airlines in matching capacity to demand. Capacity added to meet passenger demand brings in cargo capacity as well. The industry continues to pursue process improvements to improve competitiveness. To boost competitiveness and revitalize trade growth, in addition to the e-freight initiative, the industry is working toward a goal of reducing shipping times by 48 hours before 2020 from the average of 6.5 days.

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