Asia Pacific air cargo industry traumatized by Coronavirus

Since the Novel Coronavirus (2019-nCoV) Outbreak emanated in the Far East, it should come as no surprise that its disruptive impact on global logistics struck there first. Analysts agree that the one transport mode most facing the greatest challenges now and in the foreseeable future is the air cargo industry. 

Andrew Herdman, Director General of the Association of Asia Pacific Airlines (AAPA), notes that regional cargo carriers are strictly following established guidelines developed by the International Civil Aviation Organization (ICAO), in consultation with the World Health Organization (WHO), the International Air Transport Association (IATA) and Airports Council International (ACI), covering the management of public health events.

But he takes issue with a number of governments that have nevertheless introduced various measures including travel advisories, border entry restrictions and quarantine requirements.

“Regrettably, some of these well-intentioned measures seem to lack any proper public health justification, while causing significant and widespread disruption to travel and trade activities across the world,” he says. “Arbitrary restrictions and blanket travel bans are inconsistent with the International Health Regulations, and result in unnecessary inconvenience and added uncertainty among members of the public. Governments in Asia and elsewhere must strengthen dialogue and work together.”

 Still, he admits that at this “critical juncture,” improved co-operation and co-ordination by international organizations, national governments, health authorities and everyone involved in combating this global health emergency are of overriding importance. 

“Asia Pacific airlines are fully committed to working closely with the relevant governments and national health authorities to support such efforts in the wider public interest,” he adds. 

The calamity could not have happened at a worse time for Pacific Rim airlines, airports, and Asia Pacific shippers. 

According to IATA, while  the eventual impact of the coronavirus on the global economy has yet to be measured, trade tensions were at the root of the worst year for air cargo since the end of the Global Financial Crisis in 2009. 

“With all the restrictions being put in place for Asian airlines, there will certainly be a drag on economic growth, says Alexandre de Juniac, IATA’s Director General and CEO.

Asia-Pacific carriers last December posted a decrease in demand of 3.5% compared to the same period a year earlier. Capacity increased by 2.8%. The full-year 2019 saw volumes decline 5.7%, the largest decrease of any region, while capacity increased by just 1.1%. 

As the world’s main manufacturing region, international trade tensions and the global growth slowdown weighed heavily on regional air freight volumes in 2019.  Within-Asia freight tons were particularly affected (down 8% compared to a year ago).

Rosemary Coates, president of Blue Silk Consulting, observes that several of her clients are still busy trying to figure out how to get shipments out of China. 

“Airlines and air cargo operations that had been on a restricted Lunar New Year holiday schedule last month, are now completely suspended,” she says.  “Many of the factories and logistics warehouses are on extended leave, not only in Wuhan, but also Guangzhou, Shenzhen, and Shanghai. Hong Kong, with recent protest problems of its own, is also restricting incoming people and shipments from China and outbound flight operations.” 

Furthermore, some factories are being ordered to stay shut, with workers afraid to go back to work even if their factory is open.

Coates says that some companies are trying to source parts to stock up on inventory, to try to outlast this critical virus period. This in turn, will eventually cause shortages of all kinds as companies pay premium prices and hoard parts.

Yet even if some parts start to trickle out of China, enhanced screening for the virus at airports, and all China border crossings are likely to cause significant delays. 

“How long before all the factories come back to life and global logistics are running smoothly is anybody’s guess,” she concludes.