WCS Opening Plenary - IATA · Thank you to our Host Airline and Gala Dinner Sponsor. Thank you to our Platinum Sponsors. ... Thank you to our Silver & Bronze Sponsors Silver Sponsors

Glyn HughesGlobal Head of Cargo

IATA

Welcome

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Goh Choon Phong Chief Executive Officer

Singapore Airlines

Welcome Address

Dr. Lam Pin MinSenior Minister of State

Ministry of Transport and Ministry of Health, Singapore

Keynote Speech

Alexandre de JuniacDG and CEO

IATA

The State of the Industry

“Protectionism, trade friction, BREXIT and anti-globalization rhetoric are part of a genre of developments that pose real risk to our business…and broadly across the economies of the world.”

Alexandre de JuniacIATA Director General and CEO

“Protectionism, trade friction, BREXIT and anti-globalization rhetoric are part of a genre of developments that pose real risk to our business…and broadly across the economies of the world.”


“Governments need to ensure that global standards are consistently implemented and enforced when necessary.”


“We live in a world where business success is driven by data and speed. But many of our processes still use paper, phone and fax. This is not sustainable.”


“Enabling Global Trade is a mission of great importance. It helps economies to grow. And in doing so promotes better livelihoods and a better quality of life for real people in every corner of the planet. This is an integral part of why we call aviation the Business of Freedom.”


Brian PearceChief Economist

IATA

Economic Outlook

Which path will air cargo follow?

Source: IATA Economics using data from IATA Statistics and own forecasts

-10%

-5%

0%

5%

10%

15%

20%19

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

1620

1720

1820

1920

2020

2120

2220

23

% year-on-year

Source: IATA

Industry-wide FTK growth

FTKs have not grown for more than 12 months

Source: IATA Economics using data from IATA Statistics

15

16

17

18

19

20

21

22

23

24

2015 2016 2017 2018 2019

Billio

ns p

er m

onth

Worldwide FTKs

Seasonallyadjusted

Actual

Recent weakness is widespread

Source: IATA Economics using data from IATA Statistics

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2015 2016 2017 2018

% c

hang

e ye

ar-o

n-ye

ar

Growth in FTKs by market segment

ME - Asia

NA - AsiaEurope - NA

Europe - AsiaWithin Asia

Export orders point to further decline in near term

Source: IATA Economics using data from Thompson Reuters Datastream, IATA Statistics

47

48

49

50

51

52

53

54

55

56

-8.0%

-4.0%

0.0%

4.0%

8.0%

12.0%

16.0%

2013 2014 2015 2016 2017 2018 2019

Expo

rt or

ders

PM

I, 50=

no

chan

ge

FTK

grow

th, %

chan

ge y

ear-

on-y

ear

Export orders and FTK growth

FTK growth Export orders index

Weakness only partly due to restocking cycle

Source: IATA Economics using data from Thompson Reuters Datastream, IATA Statistics

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%-35%-30%-25%-20%-15%-10%

-5%0%5%

10%15%20%25%30%35%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

I-S ra

tio, %

cha

nge

year

-on-

year

FTKs

, % c

hang

e ye

ar-o

n-ye

ar

Growth in FTKs and the inventory-shipments ratio

Inventory-shipments ratio

FTK growth

The problem is with overall world trade

Source: IATA Economics using data from Oxford Economics and the Netherlands CPB

0%

1%

2%

3%

4%

5%

2015 2016 2017 2018 2019

% c

hang

e ye

ar-o

n-ye

arGlobal GDP and world trade growth

World trade growth

Global GDP growth

Late last year US & Asia added to EU trade weakness

Source: IATA Economics using data from Thompson Reuters Datastream

-4%

-2%

0%

2%

4%

6%

8%

10%

2016 2017 2018 2019

% c

hang

e ye

ar-o

n-ye

ar

Export and import volumes growth

US imports

Emerging Asia exports

EU28 imports

Trade wars add uncertainty to the outlook

No escalation

Source: IATA Economics using data from IMF, Citi ‘US-China Tariffs-Limbo on the Verge of Trade Wars’ 3 December 2018

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

% c

hang

e ye

ar-o

n-ye

ar

Global GDP growth

Full US-China trade warEscalation 25% tariffs

As does Brexit!

Source: IATA Economics using data from Oxford Economics, NIESR Brexit Impacts Report 26th November 2018

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2000 2003 2006 2009 2012 2015 2018 2021 2024 2027

£ tri

llion,

con

stan

t pric

esUK GDP, £ trillion, constant prices

No-dealDeal + FTADeal + BackstopRemain in EU

Overall GDP growth is down but is still good

Source: IATA Economics using data from Oxford Economics and Thompson Reuters Datastream

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

37

40

43

46

49

52

55

58

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

% c

hang

e ye

ar-o

n-ye

ar

PMI G

loba

l Out

put I

ndex

, 50

= no

cha

nge

Global GDP growth and business confidence

Global GDP growth

Business confidence (PMI output)

Growth in key economies looks reasonable

Source: IATA Economics using data from Oxford Economics

-10

-5

0

5

10

15

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

% c

hang

e ye

ar-o

n-ye

ar

GDP growth

India

China

USEU28Japan

Government fiscal policy remains expansionary

Source: IATA Economics using data from IMF World Economic Outlook Database, October 2018

-2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Chan

ge in

stru

ctur

al d

efic

it, %

GDP

Fiscal policy injection into economy, % GDP

US EU28 China

Stimulus

Austerity

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2000 2003 2006 2009 2012 2015 2018

US$

and

Euro

, tril

lion

Central bank assets

US Federal Reserve Bank

European Central Bank

US$ 6 trillion of bonds, assets purchased by Fed and ECB

Central banks maintaining extraordinary support


Real borrowing costs still in post-GFC range


-6%

-4%

-2%

0%

2%

4%

6%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Real 10-year bond yields

China

US

Eurozone

Slower but continued GDP growth expected

Global GDP growth

Source: IATA Economics using data from Markit, IMF World Economic Outlook January 2019

35

40

45

50

55

60

-3.0-2.0-1.00.01.02.03.04.05.06.0

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

PMI in

dex

% ch

ange

year

-on-

year

Business confidence

A pause in globalization constrains the outlook

Source: Netherlands CPB, UNCTAD Eora database, Datastream

23%

24%

25%

26%

27%

28%

29%

30%

31%

556065707580859095

100105

1990 1995 2000 2005 2010 2015

Index (2008 = 100)

Pre-GFC Post-GFC

Ratio of world trade to economic activity (left scale)

Foreign value added in exportsi.e. production ‘on-shoring’(right scale)

% of total exports

But after weaker 2019 a small rise in trade forecast

Sources: IATA Economics using data from the IMF World Economic Outlook, January 2019

0.9 1.3 1.1 0.8 0.9 1.6 1.2 1.2 1.3 1.3 1.3 1.31.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

World goods trade volumes

World GDP (market exchange rates)

% year-on-year

Implied trade to GDP multiplier:

Reasons for optimism on share of world trade

Sources: IATA Economics using data from the IMF World Economic Outlook Database, IATA Statistics

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Ratio

Ratio of FTKs to world trade volume

Weak 2019 outlook but improving trend

Source: IATA Economics 5-year Air Freight Forecast, March 2019

-10%

-5%

0%

5%

10%

15%

20%19

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

1620

1720

1820

1920

2020

2120

2220

23

% year-on-year Industry-wide FTK growth

Optimistic

Baseline

Pessimistic

Brian PearceChief Economist

[email protected]

www.iata.org/economics

Thank you!

mailto:[email protected]

http://www.iata.org/economics

Kindly sponsored by

Networking Break


IATA

Chairman’s Opening Remarks

Carlos TorneroDeputy General Counsel

IATA

Legal Briefing


IATA

Cargo: Year in Review

Equal to the capacity of

544,444Boeing 747 Freighters

2018 Cargo in Numbers

63.7 million tonnes of cargo were transported by air in 2018

Industry Outlook 2019

Decrease>10%

Decrease5-10%

Decrease0-5%

Remainthe same

Increase0-5%

Increase5-10%

Increase>10%

0%

5%

10%

15%

20%

25%

30%

35%

More than

50% predict growth

Lithium Batteries

Digital Innovation

Future Air Cargo Executives (FACE)

Action Air Cargo!

E-Commerce Growth

Single accepted Industry audit

1

Platform for improved

transparency

1

Reduction inaudit complexity

50%Smart Facility Solution

Security2013

Pharma2014

Live Animals2018

Fresh2019

Cargo Excellence

Economic Development

Combating illegal wildlife

Shipper Survey Results+400responses

52%foresee using more air cargo

2019 Shipper Survey Results

16%Very happy

7/10satisfaction

8%Very unhappy

Air Cargo is more competitive!

E-Commerce Results

40%Unaware of dangerous goods

regulations in transport for e-commerce shipments

66%shippers see e-commerce transforming supply chain

29%think air cargo adequately serves e-commerce needs

Combating illegal wildlife

83% ready to sign a code of conduct to combat counterfeits, illegal wildlife trade and illegal narcotics

Back in 1959…

This year… ULD Turns 60!

ModeratorNick Careen, Senior Vice President APCS, IATA

PanelistsChin Yau Seng, Senior Vice President Cargo, Singapore Airlines

Steven Polmans, Head of Cargo & Logistics at Brussels Airport CompanyBrian Pearce, Chief Economist, IATA

Enabling Global Trade


IATA

WCS Opening Plenary Wrap-up

Kindly sponsored by

Networking Lunch

Marco BloemenManaging Director, Seabury Consulting

E-Commerce: Air Cargo Growth,Key factors

Confidential – not for third party distribution © Accenture 2019 0 accenture.com/seaburyconsultingConfidential – not for third party distribution © Accenture 2019

Global air cargo and e-commerce growth trends

More insights, better decisions…

March 12, 2019

1Confidential – not for third party distribution © Accenture 2019

SOME AIR FREIGHT TRENDS AS OF LATE…

E-commerce continues its

strong growth

Increasing role of key e-commerce

players in air logistics

New freighter operators are rising faster than “legacy”

cargo airlines

Global air trade has seen renewed growth, but is it sustainable?



strong growth




cargo airlines



~10%

Global air cargo weight, 2000-2018Million tonnes

1) Corrections may apply due to ongoing analysis with UN Comtrade data; Source: Seabury Global Trade Database, Seabury Consulting Analysis

GLOBAL AIR TRADE HAS SEEN RENEWED GROWTHIN THE LAST THREE YEARS…

4

24

8

12

16

20

28

2002 20062003 2004 2009 20142007 2008 201812010 2011 2012 201720132000 2015 20162001 2005

+4%

+2% 0%+5%

Rest of worldChina (export + import)

1 in ~3.5 tonnes carried by air touches

China

1 in 10 tonnes carried by air

touches China ~30%

Global air trade showed renewed growth after a long period of flatlining


Air trade trend 2016-2018Monthly YoY growth rate (%)

Source: Seabury Global Trade Database

...HOWEVER, THE GROWTH HAS BEEN SLOWING DOWN

-20

-15

-10

-5

0

5

10

15

20

25 2016 2017 2018

Global air trade growth follows China-outbound decreasing trend

China outboundUS inboundWorld


High tech

TRADE TARIFFS AFFECT ~50% OF CHINA TO USA AIR CARGO VOLUMES, BUT MAY BE LIFTED

Air cargo weight, China to USA, 2018Thousand tonnes

1) Measured by air weight. Note: Figures are based on 2018 air trade weight and latest announced list of tariffs; corrections may apply due to ongoing revision of tariffs; Source: Seabury Global Trade database; Seabury Consulting analysis

Computer input/output

Other high-tech

114

Fashion Goods

197

59

88

Raw Materials

149138

Automotive

34

Computers & tablets

6983

221

52

84

Not tariffedTariffed

Comments▪ Currently, 49%1 of Chinese exports

to US (by weight) is affected by tariffs imposed by the US.

▪ Mobile phones (e.g. Samsung, Apple) are currently exempted

▪ Recent US-China trade deal negotiations remove direct threat of additional tariffs

▪ Current tariffs could possibly be lifted

Landline telecom

Mobile telecom

Machinery parts

Consumer goods

Capital Equipment Chemicals


THE INVENTORY TO SALES (I/S) RATIO HAS RISEN FOR THE FIRST TIME IN 2 YEARS

US Inventories and Sales, 1998 – Nov 2018Trillion US$

growth was on a downward trend, which seems to have come to a stop

Source: U.S. Census Bureau, Seabury Consulting analysis (February 2019)

Recent I/S ratio growth indicates slowdown of US air imports

1.2

-16

0.8

12

-4

-12

-8

1.0

0

1.4 4

2.0

8

16

1.6

20

1.8

0.020001998 2002 2004 20102006 2008 2012 2014 2016 2018

I/S ratio YoY growth (right axis)Inventories

Sales

YoY growth (%)

The decline of the I/S ratio growth seems to

have stopped in Nov 2018



strong growth




cargo airlines



13.1

2.1

9.4

1.8

8.1

2.0

1.1

1.7

1.6

1.5

Top operators by freighter cargo capacity, 20182

Million tonnes

1) Fleet as of January of each year; 2) Includes domestic and international freigter capacity (both NB and WB). Integrator capacity includes operators flying on behalf of integrators;Note: AF-KL includes Martinair; British Airways includes British Airways and Global Supply Systems; Source: IATA carrier tracker; Ascend data; Seabury Consulting Scheduled Capacity and Capacity Tracking databases; Seabury Consulting analysis

WHILE SOME LEGACY CARRIERS HAVE EXITED THEIR FREIGHTER CAPACITY, AMAZON ENTERS INTO TOP 10

IntegratorNon-Integrator

In service freighters over time, 2000-20191

Number of in service freighters

916 15

106

2015 201920102000 2005

1624

16 146

201920052000 2010 2015

912

9

2000 20102005

0

2015 2019

0

1

43

20052000 20192010 2015

00

Japan Airlines

British Airways

Air France – KLM

Prime Air operated 42 freighters in Jan-2019

EVA Air


2020-2023

72% of capacity on order is belly

Comparison vs.

2004-2019

+16% share of belly capacity on order

Factory built freighter & belly1 capacity (on order)Thousand tonnes

1) Wide body passenger aircraft (incl. mixed passenger/freight combinations); only firm OEM orders considered; years represent build years; 2) Integrator aircraft include aircraft flown by FedEx, UPS, DHL Air, DHL International and Suparna Airlines; Source: Ascend Fleet Database, Seabury Consulting analysis (March 2019)

Belly and integrator freighter capacity will be the main source of capacity growth

BELLY REPRESENTS THE MAJORITY OF THE CARGO CAPACITY ON ORDER

2

8

4

0

6

10

20132004 2007 2010 2016 2019 2022

Integrator Freighter2

Airline FreighterPassenger

56%72%

31% 7%

13% 21%

(2004-2019) (2020-2023)Build year:

after 2020



strong growth




cargo airlines



CROSS-BORDER E-COMMERCE IS BOOSTING VOLUME OF PARCELS CARRIED WORLDWIDE

Global freight and express cargo growth, 2006-2018Index (year 2006=100)

1) 2018 air freight and express figures are based on Seabury Trade Forecast database; 2) CAGR for international mail parcels and letter mail is for 2006-2017; Source: Universal Postal Union; Seabury Express Trade Database; Seabury Consulting analysis

Mail parcels increased close to 4x since 2006

2006-20182 CAGR

+13.3%

+2.0%

400

100

300

50

350

200

250

150

2012

International mail parcels (# of shipments)

2006 2008 2010 2014 2016 20181

Express air (# of shipments)

Air freight (weight)

Letter mail

+10.8%

+15.8%

+29.7%

+5.9%

-3.4%

updated…


CHINA HAS HISTORICALLY BENEFITED FROM LOW UPU RATES FOR INTERNATIONAL SHIPPING

Top countries (UPU) by outbound international items, 2017Thousand items (letters, parcels and express)

1) China and Netherlands data is for 2016; 2) Source: https://cargofacts.com/winners-and-losers-of-a-us-exit-from-the-universal-postal-union/; Source: Universal Postal Union Postal statistics, Cargo Facts

To keep transportation rates low, e-commerce may be consolidated into air freight

ItalyChina1 PolandGermanyNetherlands Hong Kong Japan Malaysia

than US domestic rates

Example: 1-pound parcel rate2

$ 10.00

$ 2.50

China Post to pay for US domestic segment

1


CHINA’S E-COMMERCE IMPORTS ARE GAINING SHARE OVER EXPORTS

Source: Ministry of Commerce, General Administration of Customs, IResearch, Analysys, AliResearch; AliResearch analysis

China’s cross-border e-commerce turnover% of export/import

Product distribution on Tmall international in 2014-’17%

90% 89% 88% 83%75%

10% 11% 12% 17%25%

Export

20132012

Import

2014 2015 2020E

25% 25%34% 36%

22% 27%24% 22%

36% 30% 23% 21%

14% 13% 12% 13%Home appliances

2014

Other

20162015 2017

Clothing, shoes, bags

Mother and baby products

Food &Healthcare

Cosmetics

+ interesting note on the Baby powder….

After a spike in 2014, demand for

foreign milk powder has decreased

Cross-border e-commerce may help to overcome imbalanced China trade


GLOBAL AIR CARGO TRENDS


strong growth




cargo airlines


▪ Though air trade growth picked up after stagnation in 2010-2016,…

▪ ….Q4 2018 shows slowdown of air trade

▪ In Jan/Feb 2019, overall freighter capacity decreases, with some regional sparks of hope

▪ Middle Eastern carriers have seen above-average growth in the recent years,

▪ ….while other airlines have downsized their freighter fleet,….

▪ …integrators are leading in global freighter capacity with new players emerging

▪ E-commerce boom continues, especially in mail-parcels volumes

▪ Key e-commerce players are increasing their role in air logistics

▪ Importance of e-commerce for China air imports increases

ModeratorGlyn Hughes, Global Head of Cargo, IATA

PanelistsMichael Steen, EVP & Chief Commercial Officer, Atlas Air Worldwide

Wolfgang Lehmacher, Senior Supply Chain ExecutiveAdriana Diener, Global Managing Director, Freight & Logistics, Accenture

E-Commerce: Embracing the market opportunity

ModeratorThomas Pellegrin, Senior Principal, IATA Consulting, IATA

PanelistsVivien Lau, Executive Director, HACTL

Dan March, Chief Executive Officer, WCA LtdWilliam Xiong, Head of Strategy & CEO Chief of Office, Cainiao

E-Commerce: Connecting the world through logistics

Innovation Awards 2019

Innovation Awards 2019

56 Submissions

22 Countries

Innovation Award Finalists

Air New Zealand Cargo & AeroTUF

Keep it cool with aeroTHERM ULD

SITA, Safran & CHAMP Smart ULD

Unilode Aviation Solutions

Digital Transformation


IATA

Closing Remarks

12Tracks

10Executivemeetings

4Workshops

12Industry Meetings

Networking break10:30-11:15

(Press Conference)



Exhibition hall Exhibition hall Exhibition hall

Exhibition hall



Exhibition hall

Tuesday 12 Wednesday 13 Thursday 14

Exhibition hall

Opening plenary9:00-12:30

Exhibition hall Morning Tracks: 9:00-12:30

PharmaceuticalsDangerous Goods

Digital CargoULD

CES (9:00-12:30)CPG (9:00-12:30)

Exhibition hall Morning Tracks: 9:00-12:30

Perishablese-Commerce

Cargo SecurityFocus on Freighters

Networking lunch12:30-14:00



Airbus Executive Cocktail (Invite Only)

FACE Young Executive Cocktail (Invite Only)

Cargo Committee Dinner (Invite Only)

Gala DinnerTime: from 19:00

Ground Handlers Reception (Invite Only)

Exhibition hall

Afternoon Plenary Session(14:00-16:00)

Afternoon Tracks: 14:00-17:30

Live AnimalsCargo Operations

Focus on AsiaCargo Transformation

Cargo Committee (13:30-17:30) CargoIQ AGM (14:00-17:30)

CPG (14:00-18:00)

Exhibition hall

Closing plenary14:00-16:00

TIACA (16:00-18:00)

Exhibition hall

Kindly sponsored by

Networking Break

Documents

WCS Opening Plenary - IATA · Thank you to our Host Airline and Gala Dinner Sponsor. Thank you to our Platinum Sponsors. ... Thank you to our Silver & Bronze Sponsors Silver Sponsors