As the air cargo industry continues along its level plain there appears an ever brighter light of optimism among many industry players. While there’s no cause for outright celebration yet, there are positive signs that the sector is gradually recovering. The problem, as Swiss WorldCargo’s Oliver Evans clearly points out – “we don’t have a demand crisis in the industry, we have a supply issue”. Most in the industry would concur that the massive influx of widebody belly capacity is the root of this supply issue, but that is surely cold comfort for those with idle freighter fleets. At the time of writing, Singapore Airlines Cargo announced it is parking a second freighter in Victorville, California effective from June 2013. It now seems very likely that going forward combination carriers will operate much smaller fleets of dedicated maindeck capacity and all-maindeck operators will face a very uncertain future. There will certainly continue to be a role for freighter capacity, but overall the air cargo landscape is undeniably changing and challenging the long-held assumptions within the industry.
But amidst the contemplation, strategising and outright hand-wringing in some cases, there are other positive developments that will surely bode well for the sector in the near future – perhaps more cold comfort as it’s not going to do much for the situation in the here-and-now. This issue starts off with an item focusing on Indonesian government moves to make logistics more efficient across the far-flung archipelago. It is a pertinent item as the country – the largest economy in Southeast Asia – has been experiencing healthy growth of over six per cent in the last few years. This year, expectations are that its economy will continue its expansion, with a forecast 6.2 per cent growth rate. With relative political stability, low labour costs and a large, young consumer population, foreign investment has been ramped up from a trickle to a surge. So too in the Philippines where a recently re-elected President Aquino has attracted the attention of foreign investors for re-establishing some sense of stability after years of a wildly fluctuating political landscape. His focus on taming the rather large and unruly beast of corruption has also been widely lauded, although the formidableness of this task cannot be underestimated. So too in the Mekong River Delta countries who have enjoyed spill over from economic growth in China and also Thailand and form the up-and-coming ‘tiger pups’ as they find their economic footing and begin attracting foreign investment in low cost, mass production. Even the former ‘basket case’ of Myanmar appears to have finally managed to emerge from under its cruel overlords and looks set to finally enjoy some degree of economic growth.
In preparation for this rapidly ramping up growth in Southeast Asia, logistics companies have been busy expanding their footprint across the region. Deutsche Post DHL for instance has said it plans to spend US$181 million in the next two years building warehouses, hiring staff and expanding vehicle fleets across the region as a growing middle class feeds consumption. Most of Southeast Asia’s 600 million people – the combined population of the US, Germany and Brazil – will reach the middle class bracket by 2020, according to Bain & Co, with the obvious impact on consumer demand. Overall, the 10-member Association of Southeast Asian Nations (ASEAN) is expected to expand 5.5 per cent in 2013, compared with 0.2 per cent shrinkage in the euro area, the International Monetary Fund forecast in April.
For the people of this vast region this is clearly good news and for the logistics and air cargo sector in particular, it certainly has a ‘rainbow after the storm’ kind of feel to it. The problem of course is getting from now to then – more cold comfort. In the cover story this month, Chris Chapman was asked by Payload Asia what his strategy is going forward. His answer was simple: Survival. “Looking ahead at the moment, given the crisis, for me I’ve always only had one strategy and that’s to survive. It’s all about surviving.”