Air cargo markets in Asia* will continueto lead global industry growthto 2025, says Boeing cargo marketregional director Tom Hoang. The USmanufacturer predicts that Chinesedomestic and intra-Asian markets willexpand annually at 10.8 percent and8.6 percent, respectively, comparedwith an expected 6.1 percent globalrate ? sufficient to triple current trafficrates by 2025.
Boeing says that the mature Europeanand North American** marketswill see slower expansion and lowerthan-average growth. Their only brightspot will be business with Asia, whichwill increase by annual averages of 6.9percent and 7.1 percent, respectively.
Looking at major passenger airlines’cargo revenue as a percentage of alltraffic revenue, Hoang says ten of the12 leading world carriers, including thetop nine, are Asian. Top is EVA Airways(50 percent), followed by China Airlines,Korean Airlines, Asiana, CathayPacific, Singapore Airlines, China Eastern,and Japan Airlines (all above 20percent), Air China (18 percent), andChina Southern (13 percent).
‘For six years Asian economicgrowth has been the (world’s) strongest,’according to Boeing’s new WorldAir Cargo Forecast, despite regionalexpansion falling after 2004. Asia willlead global economies with growthprojected at 3.6 percent/year during2005-25, with the region’s share ofworld gross domestic product increasingby four percentage points to 31percent (while the combined Europeand North America portion will fall fiveand a half points to 55 percent).
Analysing Asia more closely, Hoangdivides the region into three sectors(North America-Asia, Europe-Asia, andintra-Asia); Southwest Asia is consideredseparately.
In the first six months of 2006, USAsiacargo traffic grew 2.5 percent,compared with 2.9 percent growth ayear earlier. High fuel prices continuedto slow the market after 2004’s 16.5percent growth (driven by double-digitincreases in Australia, China, Japan,New Zealand, South Korea,and Thailand), accordingto Boeing.
Asia-North America aircargo tonnage is expectedto grow at an annual 7.1percent over the coming20 years slightly offset by7.2 percent/year gainsin reciprocal westboundtraffic, says Hoang. At 32.7percent in 2005, Chinarepresents the largestelement of this market,having grown at an average20 percent + annuallysince 1985. Japan follows at just under 24 percent, having fallensteadily from over 36 percent 20 yearsearlier.
Boeing says that US-China bilateralagreements should ensure continuingstrong growth for China’s air-cargomarket. Trade imbalances that historicallyhave favoured eastbound transpacificcargo flows should ease in futureif the US Dollar weakens against Asiancurrencies (as long-term exchange-rateforecasts suggest).
Activity in the Asia-Europe marketshould continue to expand rapidlygiven the strengthening short-termeconomic outlook for both regions,say Boeing cargo analysts. Comparativedirectional-flow predictions slightlyfavour eastbound traffic volumes overthose from Asia to Europe, with the 20-year forecast suggesting annual growthrates of 7 percent and 6.8 percent,respectively.
Boeing says that Asian technologyand light industry imports will beboosted as a result of continued investmentand infrastructure improvementsin east and south Europe. Investmentin Europe by Japanese companies couldstimulate the Asian country’s exports,particularly in foods and consumergoods. ‘Foreign direct investment oftenleads to increased trade betweenthe source of capital and the recipientcountry,’ according to the jetlinermanufacturer.
Applying this principle to the intra-Asia market, it says that Japan’sleading participation in foreign tradeinvestment within the region is beingincreasingly replaced by capital investmentfrom European and US sources.Among all regions, China is the largestreceiver of overseas investment. In thecoming 20 years, intra-Asia countriesare predicted to see an average 8.6 percentannual growth in cargo volumes.
The largest air-cargo market forSouthwest Asia is Europe, which hasprovided 5.5 percent annual growthfor the past ten years. Eastbound cargotonnage flows are set to increase at 6.6percent/year in the 20-year forecastperiod – roughly a tenth higher thanexpansion in the reciprocal westboundbusiness.
Boeing’s base model for the regionsupposes continued growth in businessprocessoutsourcing and privatisationof Indian industry, agreement betweenIndia and Pakistan, peace moves in SriLanka, and ongoing reconstructionand aid to Afghanistan. Southwest Asiaair-cargo exports to Europe outweighimports by 80 percent (by tonnage).
Overall, Hoang sees Asian cargomarkets leading global industry growthover the next two decades, led bydomestic Chinese business that is predictedby Boeing to expand at morethan 10 percent a year.
China-Europe, China-USA, and intra-Asian markets all will increase at 8percent to 9 percent annually, followedby Asia-North America (7.1 percent/year), Europe-Asia (6.9 percent), andEurope-Southwest Asia (6.2 percent).
No Asian international market willgrow at less than the predicted 6.1percent global average annual growthfor 2005-25. Such an increase worldwidewill see the freighter fleet almostdouble in size from about 1,800 aircraftnow to almost 3,600, say Boeing analysts,with the wide-body sector growingfrom about half the present fleet toover 60 percent by 2025.
After accommodatingexpected aircraft retirements,almost 3,000 newfreighters will be required.Higher average payloadcapacity, utilisation, andload factor will keep annualfleet growth belowthat of air-cargo demand,concludes Hoang.
* Boeing defines Asia as: Australia,China, Hong Kong, Indonesia,Japan, Malaysia, New Zealand,Philippines, Singapore, SouthKorea, Taiwan, and Thailand.
** For Boeing, North Americacomprises Canada and the USA,but not Mexico.