Asia to carry air cargo industry amid tough times

 

WHILE the general consensus is that the international air cargo industry is set for tough times in the near future, many are banking on Asia to soften the blow.

At the recently concluded Air Cargo Forum (ACF) in Kuala Lumpur last week, Asia, in particular China, was the highlight of many discussions on hope for the cargo industry.

Both airlines and aircraft manufacturers expect much of its demand to come from Asia during the current economic crisis, as air cargo traffic shifts to the Asian region.

"I am not saying that worldwide growth will not be impacted by the economic crisis, but that Asia is in a better position to handle it," Airbus freighter aircraft head of marketing Didier Lenormand told Business Times last week.

The Asian market remains strong because of intra-Asia traffic especially between the Indian sub-continent and Southeast Asia.

"The underlying factor would be its large population. Asia is full of highly populated countries with a rising number of middle class people that have much purchasing power.

"So, you (Asia) are not only the producers (of consumer goods) but you are also the consumers," Lenormand said.

He said the air cargo industry in Asia is structurally different from Europe and the US, which is a business to consumer market.

"The volume of freight going through Asia will continue to be high due to its business-to-business market, with many Asian countries transporting unfinished products for completion elsewhere in the region," Lenormand said.

He also said that resources available in Asia are also much higher here than in Europe, considering the high savings rate in Asia.

Aircraft manufacturer irbus expects most of its demand for new aircraft to come from Asia in the future.

Rival Boeing concurs, with it forecasting that Asia will lead in terms of the value of planes it orders at US$1.2 billion (RM4.26 billion), between 2007 and 2027.

Asia-related markets will experience growth in excess of the global average.

Airlines such as Emirates SkyCargo are also optimistic on Asia, expecting the region's air cargo traffic to stabilise and grow as governments step in to help bolster economies.

"China's move to increase export rebates is a clear example of the government coming in to stem the downward trend in exports," Emirates Airline cargo divisional senior vice-president Ram C. Menen told a press conference last Thursday.

TNT regional managing director for Southeast Asia, Onno Boots, said while the air cargo market is experiencing difficulties, there opportunities for growth.