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Ahmad Luqman Mohd AzmiCEO, MAB KARGO SDN BHD
THE ECONOMICS OF AIR CARGO: THE CURRENT SITUATION,
THE TRENDS AND THE CHALLENGES
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01
02
THE CURRENT SITUATION: AIR FREIGHT
GROWTH POSTS ITS STRONGEST FIRST
HALF-YEAR SINCE 2010
THE MARKET TREND AND GROWTH:
GLOBAL MARKET GROWTH BASED ON MH
PERFORMANCE
03
04
THE CHALLENGES: DIGITAL
ECOSYSTEM IS THE NEW BASIS
FOR COMPETITION
CONTENT
2
Q&A SESSION
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01THE CURRENT SITUATION: AIR FREIGHT GROWTH POSTS ITS STRONGEST FIRST HALF-YEAR SINCE 2010
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Source: ICAO - The Value Of Air Cargo - https://www.icao.int/Meetings/Regional-Symposia/AC-SP13/Documents/Presentations/S1_1.pdf
Highest will be
Intra-Asia
followed by
Asia-Europe
Forecasted Global Market Growth of Cargo against Passenger until 2030
*Volume of cargo
forecasted FY2017
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10.4%Freight Tonne Kilometre (FTK)
year-on-year growth in H1 2017compared to H1 2016
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2017 Market Pattern Overview
H1 2017 is the strongestfirst half of the year, afterrebound from GFC 2010.The recent outperformance ofairfreight is shown to berelative to wider world trade.
Asia Pacific and Europe havethe highest contribution andaccounted for two-thirds ofthe annual increase in FTKs, asper Chart 1.
Despite SA month-on-month growth decrementfrom May to June, FTKshows strong upwardtrend since mid 2016, asper Chart 2.
New export orders componentof the global purchasingmanagers’ index (PMI)remains close to a six-yearhigh and crucially above thenotional 50-mark thatindicates rising orders, as perChart 3.
Best of the cyclical upturn inair freight has passed. Despitegrowing export orders, the newexport orders component ofthe global manufacturing PMIhas broadly tracked sidewayssince March.
With the current level inJune 2017, the measure isforeseen to be consistentwith year-on-year FTKgrowth remainingrobust, in the region of8%, during Q3 2017.
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7
Freight growth rate by airlines grouped by regions (2011-2017)
Chart 1
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8
Actual freight volume vs seasonally adjusted freight volume by months and by years (Jan 2014 – June 2017)
Chart 2
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Correlation between air freight growth and global new export orders (2000-2018)
Chart 3
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Forecasted global manufacturing PMI by region (Q3 2017 – Q4 2018)
Chart 4
48
49
50
51
52
53
54
55
56
57
58
59
60
Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
World China India Europe Australia Malaysia
Sources: tradingeconomics.com
Manufacturing
PMI
Quarter/Year
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10.4%Freight Tonne Kilometres (FTK) growth in H1 2017, against H1 2016
8%Freight Tonne Kilometres (FTK) growth in Q3 2017, against Q2 2017
3.9%Year-on-year five-year average growth pace, 2013-2017 11
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02GLOBAL MARKET GROWTH BASED ON MH PERFORMANCE
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MH Performance Tonnage (Jan 2015 – Jul 2017)
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2015 592 594 723 611 627 593 515 559 485 547 575 466
2016 550 264 454 612 517 501 430 580 637 669 630 713
2017 578 545 664 571 602 806 659
592 594
723
611627
593
515
559
485
547575
466
550
264
454
612
517501
430
580
637
669
630
713
578
545
664
571602
806
659
0
100
200
300
400
500
600
700
800
900
2016 Average Growth : -5%YTD2017 Average Growth : 13%
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MH Freighter Network
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03DIGITAL ECOSYSTEMIS THE NEW BASIS FOR COMPETITION
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Rationalizing
cost structure
Enhancing the speed
of technology adoption
01 02 03
VALUE CREATION IN DIGITAL ECOSYSTEMDriving values along three tracks:
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Creating new sources
Of revenue
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01
02
03
Expand marketplace reach
Connecting fragmented shippers and agents
whenever, wherever
Turn product into platforms
Providing foundation for others to build upon
Distribute product development
Mobilizing many to create more
6 Disruptive Key Pattern
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04
05
06
Shorten the value chain
Transforming fewer inputs
into greater value outputs
Connect peers
Fostering direct, peer-to-peer
connections
Converge proucts
Making 1 + 1 > 2
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• Should airline mainly focus on digital plays or start building the business models to leverage on both the physical and digital economies?
• How would a digital borderless ecosystem affect the relationship between the airline, agent and shipper?
• Should airline only value the current freight forwarding customers or could airline start liaising directly with shippers provided that the shipper has the sufficient infrastructure and has the capability to comply with the required rules of engagement?
• Innovate or die?
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04 Q&A SESSION
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THANK YOU.