Air cargo leaders optimistic on future demand and capacity

Overcapacity is not expected to be an issue in the long term, according to a group of air cargo bosses.

Reflecting on the future at TIACA’s Air Cargo Forum (ACF) in Miami, Tobias König, global chief executive, Rhenus Air & Ocean, said that capacity and demand will depend on how conflict will impact the global economy.

He elaborated: “What will happen worldwide with the wars we have at the moment, how it will affect the global economy. I think if we put this out of the discussion the global economy will continue to grow and in the long term I think there will be more cargo for airfreight.”

While there is a downturn in volumes currently, the situation could potentially improve in the first quarter of next year, said König.

“It is very difficult to predict when this will normalise again. At the moment we will definitely have a further downturn for the next couple of months then we need to see in February-March year if it will go up again.”

He said the company’s customers have ordered “a lot of stock in the last couple of months and in the last year” in response to supply chain congestion concerns.

He added: “I think it will take another 2-4 months until they have sold the stock and will start ordering again for the volumes to go up again.”

Other participants in the ‘CEO Roundtable on current business environment, future opportunities and how the industry must evolve’ conference session backed König’s cautious optimism.

“I agree that in the long term there will be the demand,” added Audrone Keinyte, chief executive Bluebird Nordic.

She said that e-commerce is one of the markets that will drive demand, while some conversion programmes are being phased out to make way for new ones, and therefore keeping the number of conversions in the market steady.

She added that there are air cargo sectors still not sufficiently catered for capacity wise.

Other participants in the session stressed that air cargo’s edge over oceanfreight for speed is still relevant to the supply and demand debate.

Sanjeev Gadhia, chief executive, Astral Aviation pointed to the freighter growth predictions within the Airbus and Boeing forecasts, and noted the conversion process is constantly evolving which helps to balance supply and demand.

“When you look at the 747s they are being replaced by the Boeing 777s, when you look at the Boeing 757s they will be replaced eventually by the A321s, when you look at the Boeing 767-200 and 300, they will be replaced by the A330s.

“This is a constantly evolving game where older aircraft are being phased out and new aircraft coming in which are more sustainable and efficient.”

He added that demand for perishables is increasing, and consumer demand is high for some products and necessitates aircraft.

Gabriel Oliva, chief executive, Avianca Cargo, said: “I see some overcapacity,” but added the key is how you respond and adjust as a business by deploying capacity smartly.

Tim Strauss, chief executive, Amerijet International, also pointed out increasing levels of spending power creates consumer demand, and an expectation for speedy delivery of products and services.

“This creates a change in behaviour in demand,” he said.

If there is demand for faster movement of product currently shipped by oceanfreight “there’s not another solution outside of air cargo,” he said.

“I think there’s some demographic things that operate in our favour in the industry so I think it’s going to be pretty smooth sailing until about 2030.”