Bangkok used its hosting of the World Cargo Summit held on 30-31st January  to pitch for business in a booming sector. 

“Its potential is still far from fulfilled,” Kerati Kijmanawat, President, AOT, (Airports of Thailand) the public company tasked with running the Southeast Asian country’s six international airports told the Summit’s opening. 

AOT reported 1.4 million tonnes of international cargo in 2019, the last full year before a severe and long lockdown. But in 2022, it moved 1.18 million tonnes, making it second by volume in Southeast Asia and twenty fifth in the world. 

READ: Tailoring solutions for time critical logistics

Looking to capitalise on the opportunity presented in Thailand, a third runway is set to open in July which will allow forty more flights per hour, as well as other investments in infrastrucuture. “This year we plan to launch a new service, focusing on multimodal transport besides the implementation of a digital platform, which is also in progress,” said Kijmanawat.

Khata Vinin, Deputy Vice President Air Cargo, AOT later told the Summit it was looking at the potential in targeting pharma,“business class perishables” and express “to bring more transit in.”

AOT’s timing comes as the sector performs strongly despite geopolitical problems due to the ongoing growth in e-commerce shipments, which, to quote Steve Saxon, a partner with McKinsey who leads its Asia Pacific airlines practice, “is a massive boost” and “the saviour of this year.” 

Even problems such as the Ukraine war and the sprawling conflict in the Middle East have not slowed Thailand’s airfreight expansion, creating the need for more air cargo. “The demand side is supported by disruption,” Saxon told the Summit. 

Whilst attendees would prefer the current global conflicts and Houthi attacks to cease, some noted that the situation in the Red Sea has actually been driving trade in the airfreight industry. “It’s starting to come through now,” one said, reporting a big increase in sea-air from Dubai.  

And there could be more to come as Soufiane Daher, an expert with McKinsey stated. Some 50% of the trade using the Red Sea/Suez Canal route is high value goods and commodities, exactly the sort of cargo worth putting on a plane.  

Worldwide there are 30 million tonnes of containerised goods of this nature, equivalent to the entire airline market, Daher noted. Even a small modal shift, “would give a significant boost in the weeks or potentially months that this disruption will last,” he added. 

Despite the sweet spot the industry is currently in there are also some pressures.  

“We all need to watch out for what happens with regulation,” Saxon said of the European Union recently applying import taxes, something the US might follow. After all, this is a presidential election year, with a leading candidate a vocal protectionist.

Jaisey Yip, Vice President of the Cargo Business Division at Changi Airport Group, mentioned these “heightening regulatory demands” covering areas such security, safety and customs. “Industry bodies are also posting more requirements on how air cargo is handling, storing and transporting different types of commodities.”

As the sector evolves, the industry has to confront digitalisation, or the lack of it, and the real headwind of sustainability, although there is progress on both. 

READ: Success in Shanghai despite ‘weak’ global exports

On the former, Saxon was blunt saying it was “still in its infancy” and maybe as much as ten years behind the passenger side. It may well stay there according to some in the industry. 

“It will be tough,” getting consensus for a single platform acknowledged Chaminda Perera, Head of Cargo at Sri Lankan Airlines. “I believe there will be slow process unless the regulators come in.” Wilson Kwong, Chief Executive at Hong Kong Air Cargo Terminal Limited, presented an alternative vision, believing demand will come from customers and the lack of personnel. “That will force us,” he said. 

On sustainability, Saxon claimed this is bigger than meeting business interest for greener shipping products, it’s an existential issue. There is a long time shift from air to sea freight largely on the grounds of cost, and also a wish to meet sustainability targets. The industry is aware but the current ease of moving goods via aeroplanes and the buzz in Bangkok suggests any shift from airfreight is far away.

The post Thailand takes flight appeared first on AIR CARGO WEEK.