While rummaging around in my virtual repository of information and ideas for something to focus on in this space, one thing occurred to me. I see, hear and consequently, write a lot less about China than I did a few years ago. I remember back in 2007 when I first took over as editor of this magazine it was all about China. Since then it has moved from the fabled golden land of air cargo to an important but less ‘shiny’ market as it was once was viewed. Other markets have now taken on increasing importance in what has become a sort of China+++ for the air cargo sector.
While undoubtedly it has boosted the fortunes of many, it has also stung the bottom line of others not to mention claiming a number of casualties. It will surely continue to be one of the leading cargo markets for years to come, but things have clearly changed over the years. The vast country’s phenomenal economic rise has not even comes close to peaking and that will clearly fuel a vibrant cargo market well into the future, but the air cargo market may prove ever more challenging going forward.
The government’s push to ‘go west’ has changed the cargo markets to some extent, although Shanghai has clearly staked its position as a major cargo market for years to come and there can be no doubt about Hong Kong’s long term position as a cargo hub. Cities like Chongqing, Chengdu and Zhengzhou have been major beneficiaries of the go west policy – particularly Chongqing and Chengdu which have both emerged as electronics and IT hotspots. Chongqing has also distinguished itself as a key player in the automotive sector, boasting numerous production facilities for motorcycles and machinery.
But for air cargo carriers this has also presented a problem because unlike Shanghai, Hong Kong or Beijing, these are pretty much maindeck only destinations because of the limited passenger demand and connectivity. They also tend to be driven by consumer technology roll-outs, with sudden boom times when the latest iPhone or other gadget is rushed to market.
Meanwhile, rising wages and other costs have now made manufacturing more expensive than Mexico according to some reports, which has resulted in some shift of manufacturing out of China. This manufacturing movement has also been fostered by the China+ strategy of many multinational companies diversifying their manufacturing activities to other countries for strategic and risk based reasons. Neighbouring countries like Vietnam and Cambodia have benefited from this, while further afield, the Philippines and Indonesia have enjoyed growing foreign investment in manufacturing as their economies come around, following on from leaders like Malaysia and Thailand. Singapore of course sits in a category of its own, as does Myanmar which has already begun attracting global investment attention.
Of course being situated in Southeast Asia, it is satisfying to see the rise of regional economies after so many decades of lethargy, turmoil and outright war in some cases. Increasingly I find myself writing about new developments in many of these countries, alongside the BRICs of course – although, apart from Brazil which looks a lot like the ‘Duracell Bunny’ with economic growth that just keep growing and growing. India on the other hand has so much potential but still is having trouble overcoming infrastructure problems and a bureaucratic system so large it seemingly cannot move.
Russia with its rapidly growing economy is a bit of different animal with infrastructure, legal and security issues still needing a good sorting out. Africa too is increasingly on the radar with the vast continent looking like it will finally emerge from the dark shadow that has plagued it for far too long. Driven by Chinese investment and mineral-related activities on one hand and a keen hunger for perishable products in Europe, not forgetting oil and gas activity, the continent’s air cargo market is on the rise, but marked by many challenges.
In summary, the world is changing faster than ever and cargo markets are diversifying and becoming ever more complex. No longer is the China market the pot of gold at the end of the rainbow and this is probably a good thing. The struggling air cargo sector needs diversification and new markets to develop. As for me – like the industry, I will follow where the cargo goes.
