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January 2 2023

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Page 123 of 131

122 Journal of Commerce | January 2, 2023 EXECUTIVE COMMENTARY ANNUAL REVIEW & OUTLOOK 2023 Air Cargo Airforwarders Association Brandon Fried Executive Director A recent Air- forwarders Association survey indi - cated that while freight volumes have descended from the lofty highs of the last few years, most forwarders agree that cargo shipments are normalizing. However, shipment volumes are still rising compared with the levels experienced before the pandemic — although all forwarders agree that the slowdown will continue through 2023, with challenges ahead. Despite softening or normaliz - ing cargo volumes, recession fears and policy uncertainty are rising. However, spectacular job growth should allay fears as the slowdown remains job-rich, creating continu - ing talent recruiting challenges for our members and the industry. Our recent survey indicated that finding qualified workers remains a sub - stantial struggle for most member companies. Environmental sustainability is now a global concern. In response to this challenge, our organization recently established a committee specifically focused on reducing carbon emissions within the freight transportation industry. We applaud the International Air Transport Association and will work with member airlines next year to help them achieve the ambitious goal of attaining net zero by 2050. Another significant concern for forwarders is the safe transport of dangerous goods, specifically lith - ium batteries, given the enormous volume of e-commerce-driven parcel shipments from other countries crossing US borders daily. When poorly made batteries are shipped or not declared in air cargo shipments, our industry and airline partners have legitimate cause for alarm, even for those of us who are the most knowledgeable in dangerous goods regulations. Our aggressive plan for 2023 continues with the execution of a strategy urging lawmakers in Washington, DC, to make additional investments in airport cargo area facilities throughout the country. We know that if International Long - shore and Warehouse Union talks prove unsuccessful and US railroad unions fail to ratify their agreement, air freight volumes could surge again. As our recently published joint white paper explains, the past two years of long lines of trucks and unsurpassed waiting times at major gateway airports call for immediate and decisive action to address these issues. In addition, we plan to con - tinue an aggressive media effort and educational awareness campaign to call the attention of the White House, Capitol Hill, and state regula- tors to this enduring problem. International Air Transport Association (IATA) Glyn Hughes Global Head of Cargo Unquestion- ably, the continued downturn of the global economy will be a signifi - cant challenge that the industry must weather. With inflation likely to end 2022 at unprecedented levels in most devel - oped economies, consumers will continue to be defensive and cau- tious, as they will likely still be faced with high energy costs, rising food prices, and increased cost of housing. In fact, with most consumer prod- ucts being impacted by higher production and distribution costs, we can expect to see many areas of the economy entering a period of even more rapid downturn. Demand will clearly be a chal- lenge, but conversely, the supply side of the equation — which has been below pre-COVID-19 levels throughout the past two years — is likely to eclipse pre-COVID levels as passenger traffic returns. This combines increased belly capacity with the rising number of freighters, both conversion and production, hitting the market. These two scenarios will con- spire to place downward pressure on yields and create even more difficult operating conditions for carriers. Additionally, the industry will be faced with rising operational costs as leasing, financing, and wage costs will be impacted by the current trend of increased central bank rate hikes to combat inflation and labor force demands for salary increases to help address the rising cost of living. With the International Mone- tary Fund (IMF), Organization for Economic Co-operation and Devel- opment (OECD), and World Trade Organization (WTO) all forecasting reduced levels of global GDP and international trade, it's fair to say that seat belts need to be fastened as turbulent skies are ahead. JOC IMS Worldwide Curtis Spencer President The COVID-19 pandemic directly affected the global supply chain. The air cargo industry saw unprecedented growth driven by consumers at home buying goods online for delivery to their front doors. However, along with the growth came constraints. It quickly became clear that the traditional air cargo gateways of JFK, Chicago O'Hare, LAX, Atlanta, and Miami were tragically understaffed and overly congested during the pandemic. When passenger travel was restricted and the corresponding belly/passenger air cargo lift removed, the world's air cargo was routed by freight forwarders that used facilities at the tradi - tional gateways that were already struggling under the weight of increased cargo and limited staff. As a result, services degraded, rates escalated, and customers paid the price. On the opposite end of the spectrum, regional air cargo gateways, including Greenville– Spartanburg in South Carolina, Ohio's Rickenbacker, and Chicago Rockford, performed well, maintaining service levels and predictability. For example, one major forwarder found that cargo could be routed through Greenville–Spartanburg for their Atlanta facility faster than they could route and recover the same ship - ments through the Atlanta airport. Today, commercial belly lift on passenger planes has not recovered to 2019 levels, and the Asia Pacific lanes are still one to two years from return- ing to pre-pandemic levels. In the next two years, continued double-digit percentage — or greater — growth in cross-border, e-commerce cargo volumes will continue to drive demand for alternative cargo airports, which offer expedited throughput to last-mile systems. The competition for air cargo will drive new site selection and routing decisions, and smart forwarders and carriers will need to chart a course to the most competitive land-side locations. What happens on the ground directly affects the success and predictability of an air cargo supply chain. "What happens on the ground directly affects the success and predictability of an air cargo supply chain."

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