e-commerce makes Asia's air cargo market fly high

-A Monitor Report 01 Nov, 2018 | 247 Views | 0 Comments
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Goods being packaged at a centre for e-delivery
Singapore : Strong e-commerce demand is fuelling Asia's air freight market, with the US-China trade war having minimal negative impact so far and in some cases even boosting shipments, industry executives said.

e-commerce is growing at pace in populous Asia, driven by Chinese behemoth Alibaba Group Holding and rival JD.com, as well as others such as Japan's Rakuten, sponsor of Spanish soccer giants FC Barcelona.

But the flow of goods has been threatened this year by the United States imposing import tariffs on billions of dollars worth of Chinese goods to redress what it regards as unfair trade relations - with China's government responding in kind.

"The economy today has been very, very strong. Frankly in anticipation of this geopolitical situation I think people are just going out and moving [cargo] quickly," said Randy Tinseth, Vice-President, Commercial Aeroplane Marketing, Boeing.

Asia-Pacific air cargo volume rose 4.8 per cent in January-August, showed data from the Association of Asia Pacific Airlines (AAPA). That was lower than last year's 9.8 per cent but came off a higher comparison base at a time of record shipments, said Andrew Herdman, Director-General, AAPA.

Asian airlines have an outsized role in air freight, accounting for nearly 40 per cent of the global market as the region is a major manufacturing hub and e-commerce is growing.

Boeing forecast air cargo traffic would double over the next 20 years, growing at an average rate of 4.2 per cent a year.

To meet that demand, the aircraft manufacturer expects the world freighter fleet to expand over 70 per cent to 3,260 planes. Around half of air cargo is carried in the bellies of passenger jets, with the remainder flown on dedicated freighters.

Some large Asian cargo carriers including Cathay Pacific Airways and Korean Air Lines rely on freight for around a quarter of revenue.

In the short term, trade war impact has not been too visible because initial tariffs were on items not typically transported by air such as metals, the Herdman said. That is starting to change, however, as duties apply to more goods.