Opinion: Promoting Growth in the Air Cargo Industry
Will the global supply chain continue to fuse and fortify? Or will the links be fractured — and business fortunes fractionalized — by shortsightedness?
Make no mistake: The unstoppable forces of globalization and e-commerce are transforming the supply chain. Before our eyes, the movement of goods, the exchange of information and the accessibility of finance are all being channeled into a single flow of commerce worldwide. This convergence has spawned whole new industries and commercial opportunities.
The air cargo industry has played an essential role in globalization — with air cargo volume nearly tripling in the past decade. Last year alone, a full 40% of the world’s manufactured exports, by value, was transported by air. In the coming decade, international air transport is expected to grow by 5% a year — twice the growth rate of the overall global economy.
That said, there is no question that the continued development of world commerce is impossible without a robust air cargo industry to support a seamless global supply chain. Without it, all the promise and potential of a global economy will be less than meets the eye.
So what steps need be taken to keep the air cargo industry growing vigorously?
First, there is the obvious need to continue to invest generously in both infrastructure and new technologies. Because international air shipments are such a big part of the foundation for global economic growth, all businesses have a stake in how efficiently, and profitably, air transport companies operate.
Continuing public-sector investments in airport expansion, roadways and telecommunications are likewise essential as we struggle to overcome the congestion caused by increased air traffic. Such investments have a direct positive impact on all modes of transportation.
Just as unconstrained access to information is vital to e-commerce, physical access to runways and cargo-handling facilities are vital to the fulfillment of e-commerce. The transportation industry needs to support aviation authorities vigorously when they plead to the public for expanding or upgrading infrastructure.
The second thing we can do to keep growing is to cooperate more effectively on appropriate issues and initiatives. To that end, UPS recently joined in the leading airline B2B marketplace, Airnewco. We’re working with Qantas, Delta, British Airways, Air France and other airlines that collectively represent more than $45 billion in annual purchasing power for aviation parts.
Partnerships are nothing new in the transportation industry, and they represent a very effective way to enter new markets with minimal capital investments. To that point, a panel at the recent Transport Topics Management Outlook Forum said that to thrive in a collaborative business, carriers will have to leave their egos at the door, in terms of sharing information as well as some control. The result, said the panel, is that they will have access to business they never could have gotten on their own.
The third element to promote industry growth is one we can all act on — and that is to support fairness and openness in every market.
The health of the seamless global supply chains we are building depends upon healthy local economies. Yet in many parts of the world, unnecessary barriers to trade still block the pathways to prosperity. As an industry, we need to keep pressing forward on issues like inefficient customs clearance, restrictive air rights, and trade policies that are designed to shield inefficient local operations from competition.
And we need to be on the side of inclusion. We should strive for equal treatment for all by governments and oppose unfair advantages granted to one competitor over another. With globalization and electronic commerce accelerating the speed of business exponentially, the rising economic trend should skyrocket in the coming years. That’s why we all need to work with governments to dismantle antiquated customs procedures, sky-high tariffs and limitations on foreign investments.
We believe governments around the world can do a lot more to open up the aviation sector.
We also need to address a broad range of issues specific to electronic-commerce growth. Opening global competition in key sectors such as telecommunications, transportation and financial services is essential.
ur challenge is to create a business environment prepared for this new age of commerce — an environment that allows all cargo companies to compete fairly and openly in the world marketplace.
When obstacles to integrated global supply chains are removed, everyone will benefit. All of us in the cargo industry need to embrace the innovations that are coming our way every day. That’s how we can continue growing as an industry and serving as a catalyst for economic expansion throughout the world.
The pace of change remains too slow. Our customers certainly aren’t willing to be constrained by antiquated rules. The time for change is now and the need for change has never been more urgent.
Mr. Weidemeyer is senior vice president and chief operating officer of UPS and president of UPS Airlines.
