Wednesday, October 5, 2011

Cargo Slump In August Depresses Freight Levels as IATA Call for More Security

IATA Figures Released Whilst They Criticise EU over Carbon Emissions
Shipping News Feature

WORLDWIDE – As if to underline his recent speech in Hong Kong which criticised the European governments’ stance on emissions trading in a difficult economic climate, Tony Tyler, the International Air Transport Association (IATA) Director General and CEO announced depressing global air freight and passenger traffic results for August this week showing cargo levels shrank year on year by 3.8%, double the pace of July’s 1.8% decline. Comparisons of July to August more clearly indicate the slowdown. The total passenger market fell by 1.6% in August compared to July. International markets declined by 1.8%, while already weak domestic markets shrank by 1.0% and the total cargo market fell by 1.3%. Mr Tyler commented:

“The industry has shifted gears downward. The pace of growth in passenger markets has dipped and the freight business is now shrinking at a faster pace. With business and consumer confidence continuing to slump globally there is not a lot of optimism for improved conditions any time soon.”

The IATA boss had spoken the previous week at the Greener Skies conference in Hong Kong when he pointed out that IATA and the rest of the air freight and passenger carrying community had committed to an ambitious agenda to reduce CO2 emissions. He urged the European Union (EU) to abandon what he referred to as ‘its misguided plans’ to include aviation in the EU Emissions Trading Scheme (ETS) commencing in 2012.

Airlines, airports, air navigation service providers and manufacturers are committed to improving fuel efficiency by 1.5% annually to 2020, capping net carbon emissions from 2020 with carbon-neutral growth and cutting net emissions in half by 2050, compared to 2005. As such IATA believes these are challenging enough targets for an industry which, whilst much criticised, only produces around 2% of global manmade CO2 emissions.

The IATA targets represent a reduction from 650 million tonnes of CO2 to less than half that in the next forty years at a time they estimate passenger levels will rise from the current 2.8 billion per annum to an astonishing 16 billion and cargo will jump from 46 million tonnes annually to 400 million tonnes.

IATA reiterated that the industry has agreed on a four-pillar strategy to achieve emissions reductions that has also been endorsed by governments through the International Civil Aviation Organization (ICAO). The four pillars are (1) investments in technology, (2) more efficient infrastructure, (3) more efficient operations and (4) positive economic measures. Tyler’s speech at the time was nothing if not controversial. He said:

“Europe’s plans contravene international law with the extra-territorial application of taxes. What right does Europe have to charge an Australian carrier for emissions over China? It is an attack on sovereignty that is being challenged by governments. China, India and the US are among states formally opposing the EU ETS. And the US is even processing a bill that will prohibit its carriers from participating. While the EU sees its actions as supporting a positive environmental agenda, the rest of the world sees it as an attack on sovereignty.

“IATA is not opposed to emissions trading. We support the concept as a possible mechanism for the fourth pillar of our environment strategy. But the EU’s unilateral and regional approach to ETS could not be more misguided. It is distracting governments from focusing on the real solution—a global approach through ICAO.”

IATA further believes that the EU plans will lead to several other problems. These include distorted markets in which direct flights from other continents will be levied charges for the entire journey whilst transhipment at a hub just outside Europe will only incur EU penalties for the final leg.

Carbon taxes may well end up being levied twice as with passenger duty currently found in certain European states which were also justified when they were introduced as ‘environmental’ and there is no guarantee that the monies collected by the EU will be used for Green initiatives.

Tyler plainly has faith that biofuels may be a partial solution to the problem but accepts that without the participation of what he described as ‘big oil’ and a policy framework of fiscal and legal incentives to encourage their commercialization, the new fuels will remain a niche market with programmes like that between Air China, Petro China and Boeing making significant steps forward.

Mr Tyler has been busy in the past week righting the wrongs which he feels curse the industry. His last port of call was the aviation security event, the AVSEC World Conference and Exhibition in Amsterdam, an IATA sponsored event which runs until the 6th October. After criticising out dated methods of security in the passenger processing system he turned his attention to the freight market saying:

“The future of air cargo security is a multi-layered approach involving the whole supply chain and including both advanced electronic information and physical screening. But we don’t want to see 100% screening at airports, which would grind global commerce to a halt.”

Tyler pressed the case for IATA’s Checkpoint of the Future (CoF), a supply chain approach to cargo security, harmonization of measures among governments and constant vigilance to new threats. He emphasised that technology and regulation will never prove an adequate substitute for vigilance. He further objected to the development of ‘Red Lists’ which vilify certain states concluding:

“Requiring certain countries to overcome extreme hurdles to participate in global commerce is the wrong approach. It will only further isolate those states most in need of our support, and for which air cargo offers a path towards economic prosperity. IATA’s Secure Freight program can help states develop the infrastructure and processes for supply chain security to global standards.”

Mr Tyler's full speech to the Amsterdam Air Security Conference can be seen HERE.

Photo: IATA boss Tony Tyler