The industry has become more stable and predictable after 2023. Recent industry reports, including statistics from the Organisation for Economic Cooperation and Development, suggest that the global economy has proven to be resilient with growth in all major economies and a decline in inflation percentages towards central banks’ targets.
“This has resulted in more opportunities for World Alliance GSA (WAG) to engage with new challenges. WAG’s operational and partnership resources continue to grow in tandem with the industry momentum since securing a contract with United Airlines Cargo in Southeast Asia,” Roland Quah, Executive Director of WAG, explained.
North America remains the major consumer market. Penned up post-Covid demands and the strong economy in the United States continues to lead the charge with exports mainly from the Asia-Pacific region.
Strong intra-Asia bilateral trade has created higher volumes of inbound and outbound traffic between North Asia and Southeast Asia. Exports to European markets remain stable but prospects are subjected to the current conflict and geopolitical tensions in Europe.
“The spike in freight volumes had stabilsed after being equalised by the addition of belly capacity after the resumption of post-Covid flights. Increased capacity creates yield pressures and a more competitive environment for market share,” Quah outlined.
“The air operator’s directives and competitive nature will determine how the GSSA implement those directives together with global freight partners to meet set performance targets and sustainability.”
Challenges on the horizon
While the economic outlook has become more balanced, uncertainty remains due to the geopolitical tensions.
The current European conflict has created a reduction in demand for exports to Eastern European territories, as many airlines suspended flights to areas affected by the ongoing conflict, resulting in higher operating costs and lower payload. Trade sanctions have also affected overall trade demand potentials, making business development and sustainability challenging.
“We are adapting to these challenges and working together with our airline principals for closer cooperation to mitigate impact caused by flight suspensions with alternate linehaul options,” Quah revealed.
Changing demand
The fluctuation in demand for airfreight volumes is confined mainly to the high-value electronic components shipments in which supply and demand are determined by manufacturing inventory cycles.
Past data suggests an upward demand trend for freight of all kinds (FAK) starting from the second half of the year.
e-commerce shipments are a permanent feature in the cargo segment. The major source of e-commerce shipments comes from Northern Asian origins in large quantities for transhipment to worldwide destinations.
They are placed on a lower priority basis as e-commerce shipments are designated with a longer delivery lead time.
“We work with our principals to accept e-commerce shipments in manageable load quantities to fully utilise balance capacity on our flights without compromising on service quality.”
