Onshoring Reduces Air Cargo Volume
Passenger volume growth is outpacing air cargo, with a “big gap” emerging in the last three years as onshoring has stifled international trade volumes.
IATA chief economist Brian Pearce said that air cargo’s role as a lead indicator for passenger volumes has broken down since 2010, as witnessed by a dramatic divergence in revenues of US$20bn in 2013.
While airfreight has historically performed well at the peaks of economic growth and badly in the troughs, air cargo volumes have flatlined since 2010 as passenger traffic grew strongly.
Pearce told the IATA World Cargo Symposium in Los Angeles that onshoring – sourcing goods locally – was a key factor in this recent trend, but not the only one.
Ocean Freight Shipping
The average 2.5 ratio in favour of international trade versus domestic production has stopped, with Pearce calling it “as critical an issue” as mode shift to ocean freight.
The question for the air cargo industry, observes Pearce, is whether this trend continues or is ‘a temporary blip’.
Onshoring has also been accompanied by trade protectionism, a theme raised by several speakers at the conference, with many rallying the industry to lobby against ‘beggar thy neighbour’ policies.
Rising labour costs in China have accelerated the onshoring process but the upside is that a larger and richer Chinese consumer base could fuel longer term demand for air cargo.