Trade has grown explosively over the past three decades, and by our own estimates there is a 2 percent increase in the value of world trade for each 1 percent increase in the size of the world economy. It is worth remembering that air freight represents less than 1 percent of total intercontinental trade tonnage, so even minuscule market-share movements can translate into significant air freight growth. Each day, the world economy becomes more integrated and interdependent. More positive evidence can be found in the economic opening of China, which may eventually become the world's largest economy. Progressive economic integration, and steady reduction in protectionism, should boost overall trade flows, and with it air freight traffic.
Many firms increasingly plan to use air freight to shorten delivery times to the end-customer.
Of course, these firms must also increase emergency use of air freight because they have less safety stock to avoid production shutdowns or retail stockouts. Adjusted for inflation, air freight rates have declined steadily for 30 years. Clearly, air freight demand is stimulated by cheaper rates, but the price elasticity cannot be calculated from the available data. Any decline in world economic activity, whether cyclical or shock-induced, obviously would harm air freight growth. The Asian economic crisis hurt investor confidence in emerging markets, and helped trigger financial crises in Russia and Brazil.