…states TIACA Chair, Steven Polmans (SP) in this exclusive CargoForwarder Global (CFG) interview. Due to the thriving e-commerce business, cargo airlines are tending to shift their capacity from Latin America and Africa to routes connecting China with Europe and North America. This could hurt the agricultural industries in Kenya, Colombia, or Ecuador, that depend on reliable air transports to market their floral products, fruit and vegetables.
He also reflects on the amazing upswing of the cargo business in Budapest and comments on the role of ChatGPT, AI and the growing importance of sustainability for the cargo industry as a whole, and his own club, The International Air Cargo Association (TIACA).
CFG: Steven, on Tuesday (08OCT24), you delivered the keynote speech at the BUD Cargo Day. In your role as TIACA Chair, the industry expects you to take a neutral stance. Nonetheless, we would like to know how you and TIACA value the cargo development at BUD in recent times.
SP: Indeed, TIACA does take a neutral stance when it comes to promoting one member over another, however what we can do and, in fact, we must do, is spotlight success, promote innovation and improvements in the customer experience, and recognize when parties have performed well. This can only inspire others. The numbers speak for themselves in BUD. The airport is aligned with the community and, in turn, they are both aligned with customer and market needs. You could argue there are other reasons for their success, such as location or government and customs support. But that falls short in explaining what has been happening at Budapest for many, many years now: a clear, well-articulated vision and strategy, supported by precise execution are the key ingredients for their long-term success and this differentiates them from many other airports in the region and around the globe.
CFG: According to ChatGPT, which you cited during a panel, e-commerce will play an ever-dominant role in air freight – not only in Budapest but also elsewhere – followed by digitalization, data analytics and sustainability/decarbonization. What is your answer to this machine-generated prediction?
SP: ChatGPT scans, analyzes and aggregates to generate these AI thoughts. So, nobody is surprised by this outcome as it impacts all our agendas these days. These are the topics the industry is talking about and that shape our immediate situation as well as the future. One interesting topic which e-commerce masks is what is happening to the other industry verticals, i.e. high tech, perishables, pharmaceuticals, fresh produce, fashion, precision instruments, etc. We cannot forget the important role they and other verticals play in driving industry success.
CFG: If this ChatGPT-generated forecast comes true, what are the implications for route decisions and network considerations by major cargo airlines based in Europe, the Middle East or the Far East, that operate large freighter fleets?
SP: I think we are already seeing this playing out. Demand for capacity to support e-commerce out of China and east Asia, is continuing to grow, and to satisfy that demand, we are seeing capacity redeployment from other markets into the Key Asia – Europe and Asia – North America trade lanes. These routes are reflecting load factors of more than 88%, whilst return loads are operating around half that. This growing imbalance is a concern. But also, the availability of capacity for flower exporters in South America or Kenya might be impacted by this. As many others.
CFG: And what will the implications be for traditional and large cargo airports, for instance Dubai or Qatar? Will nonstop e-commerce flights between China and Europe challenge their business model based on stopovers and the transshipment of freight? As various industry representatives such as Dennis Li from Cainiao, emphasized in Budapest, fast air transportation is one of the key criteria in e-commerce.
SP: Jack Ma laid out the global vision for e-commerce: 72 hours anywhere to anywhere. So direct hub to hub operations are important in moving large volumes across major trade lanes. However, e-commerce also needs to arrive at second and third-tier airports and therefore the market will continue to provide great opportunities for all operators. Asia to major European hubs will continue to grow, as will Asia to Middle East hubs, and then to second and third tier destinations. In the latter situation, effective main deck to belly operations will be key.
CFG: What role does e-commerce play within TIACA? Supposedly, you have this topic well on your radar.
SP: Absolutely! In fact, we have recently launched the first e-commerce industry task force, comprised of all sectors of the supply chain, to look at this very topic. The objective will be to highlight common issues and pain points, and to then propose practical and workable solutions. We are not a standards-setting or regulatory body, but we will use our industry connections to promote needed solutions to those who can act.
CFG: Back to the ChatGPT findings which rate sustainability and decarbonization very high as action fields for air cargo. How are TIACA’s sustainability efforts proceeding?
SP: Another great question. Sustainability is no longer just an industry buzzword; it is now almost a justification to continue in business, with customers, partners, employees, local communities, regulators, financial partners, and others, all demanding to see greater ESG focus by organizations. TIACA has continued to grow its portfolio of sustainability focused tools to helps in as many areas as we can. Our annual survey and Insights Report provides the most transparent report card of how the industry is performing collectively. On an individual company basis, our BlueSky program, which provides a company with a personalized assessment of its sustainability strategy and actions, continues to grow. More recently, we have launched a Training Library to connect those with training needs to those with training solutions. We have also launched our Investing in Climate Action Platform, which enables organizations and individuals to invest in several social and environmental projects across the globe and, in turn, they will receive certified carbon credits.
CFG: TIACA’s Air Cargo Forum 2024 is just around the corner. It will beheld at the Miami Beach Convention Center from 11-14NOV24. What are the three most important topics listed on the agenda, that no attendee should miss?
SP: Where to start? There are so many anticipated discussions that we will aim to tackle at this year’s ACF. Starting from global economic prospects following a year of significant elections, to the impact on trade policies and border management, through to balancing the capacity supply vs demand equation, not forgetting that people and operational challenges will feature heavily, and particularly how new tech, led by AI, automation and autonomation, will shape future operations. And, as mentioned previously, the whole topic of sustainability, as it relates to people, planet, and global prosperity, will also feature.
CFG: Dear Steven, thank you for your reflections.
