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Mar. 2015

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18A THE JOURNAL OF COMMERCE MARCH 2015 COOL CARGOES A FTER SEVERAL YEARS of stagnat- ing growth caused by the global econom ic dow ntu r n a nd weak trade growth, the air cargo business is expanding and the immediate outlook is decidedly positive. Global air cargo traffic started show- ing signs of improvement in the second quarter of 2013, according to Boeing's lat- est World Air Cargo Forecast. By July 2014, traffic had grown 4.4 percent compared to the first seven months of 2013. For 2015 and 2016, the WACF predicts sustained air cargo growth as global economic condi- tions and trade levels improve further. The air cargo sector is under increas- ing competition from ocean carriers for certain cargoes, however, especially per- ishables. Consider that in 1980, ocean carriers' share of refrigerated shipments moving via container stood at 33 percent. By 1990, that figure rose to 47 percent, then grew to 68 percent in 2000. And in 2014, ocean containers transported 75 per- cent of refrigerated cargoes. The WACF report acknowledges this shift and its repercussions. "Competition with other modes of transportation could present a challenge for air cargo. Changes in the container ship industry have enticed shippers to move their freight away from air cargo when schedules and time com- mitments to customers permit," it states. While shipping by ocean container is typically 10 times less expensive per unit weight than air cargo, it comes with longer and less reliable transit times, the report notes. In addition, "The goods that are shipped by air are high-value, time-sensi- tive, and perishable, and require speedy and reliable transport. To continue to compete effectively with container ships, the air cargo industry must ensure that the service benefits of air transportation are not eroded. For example, track-and-trace tools, once the sole provenance of the air express industry, are now commonplace at surface transport providers." Indeed, more sophisticated software and technology tools are helping drive the migration from ocean to air. "Better information and improved supply chain visibility allow shippers to plan and man- age their supply chains with a higher degree of confidence, encroaching on one of the primary advantages of air cargo. Air cargo has traditionally offered ship- pers a unique means to recover from unforeseen events and emergencies. Anec- dotal evidence suggests that improved supply cha in v isibilit y ha s reduced the occurrence of situations that demand AIR CARGO'S COLD CHAIN ASCENT "To continue to compete with container ships, the air cargo industry must ensure that the service benefits of air transportation are not eroded." New products and services aim to retain and expand a coveted cargo segment By Lara L. Sowinski the speed and reliability of air transport." Cha nges in the f lor iculture trade reflect the dynamics of the broader mar- ket. Rabobank's World Floriculture Map 2015 calls the transport of cut flowers by sea container "a major and unstoppable development and has already become fairly substantial in a number of trade flows." For example, "About 15 percent of total cut flower exports from Colom- bia are already shipped by sea. In 2013, Colombia shipped about 700 contain- ers of mainly chrysanthemums to the United Kingdom. One 40-foot container can be loaded with about 150,000 chry- santhemum stems. Other large container f lows are from Vietnam to Japan and from Israel to Europe." It's no wonder the air cargo industry is doubling down on key components of its business, including perishables. Raymond Segat, director of cargo and business development for Canada's Vancouver International Airport, said the airport is a connecting hub that is part of a global supply chain. The airport works closely with industry to capitalize on the benefits of Vancouver's location within Canada's Asia-Pacific Gateway. Vancouver International has seen impressive cargo growth in recent years. In 2014, the airport handled 256,935 metric tons of cargo, up 12.5 percent from 2013. Approximately 25 percent of the airport's cargo trade is with the Asia-Pacific region — the top destination for British Colum- bia's exports by air, accounting for more than C$600 million in 2013. British Colum- bia agricultural exports by air totaled C$264 million in 2013. Seventy-one percent of these exports included dungeness crab, geoduck clams, sea urchins, salmon and cherries. In the meantime, the airport is pur- suing several major initiatives aimed at improving services and facilities for

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