The Strategist

E-commerce boosts the Asian air cargo market

10/19/2018 - 15:31

Strong demand from online retailers provides an incentive for the air cargo market in Asia, while the trade war between the United States and China has so far had a minimal negative impact on the industry, Reuters reports.

The volume of air cargo in the Asia-Pacific region in January-August increased by 4.8%, according to data from the Association of Asia Pacific Airlines (AAPA). The growth rate is lower than last year’s 9.8%. However, the CEO of AAPA, Andrew Herdman, noted the effect of a high base when compared with record deliveries.

According to him, the demand for air transportation was facilitated by the desire of companies to make deliveries prior to the introduction of duties.

In the short term, the impact of the trade war was not particularly noticeable, since duties were initially imposed on goods that are not normally transported by air, such as metals, Herdman said. However, the situation is beginning to change, as duties are being applied to a larger number of goods.

In late September, the United States imposed a 10% duty on Chinese goods worth $ 200 billion. As a result, the total value of goods affected by duties increased to $ 250 billion. In addition, US President Donald Trump did not rule out a possibility of introducing additional duties on Chinese goods $ 267 billion

Beijing imposed retaliatory duties on US goods worth $ 60 billion, increasing the total value of goods affected by duties to $ 110 billion.

"I heard one example... Seafood shipped from the US to China is subject to retaliatory duties, so demand in China is declining. And you know what? There is nothing wrong with the demand for Canadian seafood," the AAPA head said.

Asian airlines play a large role in air travel, they account for almost 40% of the world market, since the region is a large manufacturing center. In addition, e-commerce is actively developing in Asia through the efforts of Chinese giants Alibaba Group Holding Ltd and Inc., as well as other players such as Japanese Rakuten Inc.

Boeing on Monday predicted that air cargo will double over the next 20 years, increasing by an average of 4.2% per year.

According to estimates of the Aircraft Corporation, to meet this demand, an increase in the fleet of world air carriers by 70% to 3,260 aircraft will be required. About half of the cargo is transported on passenger aircraft, the rest - on special cargo ships.