Countries with 1% better air cargo connectivity engage in 6% more trade

IATA has released the results from a study identifying a quantitative link between a country’s air cargo connectivity and its participation in global trade.

A 1% increase in air cargo connectivity was associated with a 6.3% increase in a country’s total trade. “Air cargo is key in supporting the current global trading system,” said Brian Pearce, Chief Economist at IATA. “In 2015, airlines transported 52.2 million metric tons of goods, representing about 35% of global trade by value. That is equivalent to $ 5.6 trillion worth of goods annually, or $15.3 billion worth of goods every day. We now have quantitative evidence of the important link between air cargo connectivity and trade competitiveness. It’s is in the economic interest for governments to promote and implement policies for the efficient facilitation of air cargo.”

Key policy level and practical industry modernisation priorities to improve countries’ air cargo connectivity identified in the study encompass:

Legislative priorities include the ratification and implementation of:

n1999 Montreal Convention to enable countries to adopt e-freight; and

nWorld Trade Organization (WTO) Trade Facilitation Agreement and World Customs Organization (WCO) revised Kyoto Convention to implement smart border solutions that reduce complexity and costs.    The practical industry modernisation priorities include:

nFacilitation of electronic processing, through electronic Air Waybills (e-AWB) and e-freight;

nImplementation by governments of ‘single window’ processing – ultimately enabling submission of all regulatory documents for trade via one channel;

nCoordinated border agency procedures to reduce duplicative controls;

nImplementation of risk management controls at borders to combat illicit activities and facilitate compliant traders; and

nImplement processes to approve release of shipments in advance of their actual arrival.

“Facilitating trade with efficient air cargo processes requires a strong partnership between governments and industry,” said Glyn Hughes, Global Head of Cargo, IATA. “Governments have the important role of implementing global standards and agreements to facilitate trade and make it possible for airlines to modernise processes. In turn, the industry needs to embrace these opportunities to improve competitiveness and provide customers with enhanced shipping quality, service and better predictability.” The study, commissioned by IATA, was conducted by Developing Trade Consultants.