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IATA: air cargo profits a “major challenge”

SHANGHAI: Speaking at IATA's World Cargo Symposium, the association's CEO Tony Tyler admitted that as an air cargo optimist he thought "the last few years have been very difficult" for the industry.

Noting a "welcome" 4.5 percent freight-tonne kilometer (FTK) increase in 2014, Tyler added the upturn was not matched by an improvement in yields and revenues.

TonyTyler 003 full sizeWith cargo revenues remaining US$5 billion below their 2011 peak, and yields set to decline for a fourth straight year in 2015, he reminded his audience that "doing more work for less money is not a sustainable business model for the long term" and added the industry has a major challenge to make air cargo profitable.

Tyler acknowledged that while the traditional airline/forwarder sector still operates with procedures from an analogue age "despite a digital revolution affecting every shipper, freight forwarder, airline, technology and service supplier to this industry," last year was a "breakthrough" with e-AWB penetration reaching 24.9 percent.

IATA says it has a goal of 45 percent uptake by the end of this year and together with FIATA, is trying to help achieve this by establishing a better business relationship between airline and forwarder based on a customer-supplier rather than the outmoded agent-of-the-airline model.

With China accounting for 7.0 percent of global airfreight and set to increase volumes 4.9 percent a year to 2018, Tyler said the rise of e-commerce and the ability of small businesses to export to a global audience has created a "significant" group of shippers who are not familiar with dangerous goods regulations.

He said IATA was particularly concerned about the safe transportation of lithium batteries and noted that China is a major production source: "Disappointingly, we are seeing some willful non-compliance in the area of lithium batteries. For example, there is a supplier on Alibaba claiming they will re-label 300 Watt hour batteries as 100 Watt hour, and even ship them via the standard postal service."

Tyler warned that without oversight, surveillance and where necessary enforcement by regulators, shipper compliance would be limited: "We need to work hard with all stakeholders in China to tackle this crucial issue," he added.

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