Analysis

Why ageing populations is good news for air cargo

Why ageing populations is good news for air cargo

PHARMA shipments provided one of the few bright spots for air cargo in 2015, which saw China’s three-day Yuan devaluation trigger reverberating economic shock waves around the world.

Although November was not a good month for airfreight – for the first time in two and a half years, monthly volumes dropped year-on-year (-0.9 per cent) –new figures also show the niche pharma sector generated a year-on-year volume growth of 10.5 per over the previous three months, according to statistics company World ACD.

This upwards trend looks set to continue, assisted by macro-economic factors such as the rapidly expanding global ageing population, writes Thelma Etim.

By 2050, the world’s population aged 60 years and over is expected to total two billion, up from 900 million in 2015, reveals the World Health Organisation (WHO). Eighty per cent of all older people will inhabit low- and middle-income countries over the next five years.

“The pace of population ageing around the world is increasing dramatically,” the WHO notes. “[Previously] France had almost 150 years to adapt to a change from 10 per cent to 20 per cent in the proportion of its population that was older than 60 years.”

While this shift in distribution of a country’s population towards older ages – known as population ageing – started in high-income countries (for example, in Japan 30 per cent of the population are already over 60 years old), it is now low- and middle-income countries that are experiencing the greatest change, the WHO underscores.

Changing demographics means that by the middle of this century many countries such as Chile, China, the Islamic Republic of Iran and the Russian Federation will have a similar proportion as Japan, it adds.

New middle classes in emerging markets will demand better healthcare, along with technological advances in medicines and treatments, and this will contribute to the buoyant pharmaceuticals and life-sciences industries.

These trends mean that airfreight and logistics operators which invest in transporting pharma-related products/accessories, such as patient-warming and -cooling systems, can expect to benefit from steady cargo flows in 2016 and beyond. Research shows the temperature-management market alone is estimated to reach US$2.6bn by 2020.

In particular, India’s pharmaceuticals sector, which currently produces many of the world’s generic drugs, is forecast to be worth $55bn in the next five years.

By contrast, China’s slow-moving transition to a consumption-led economy is predicted to continue to impact world trade. China and Hong Kong’s exports by air to Europe were below the previous year’s volumes for a good part of 2015. Over the past months this negative pattern has reversed, reveals World ACD.

Asian air cargo also slightly recovered nearer the end of the year. “Contrary to recent figures from other sources, we observe rather positive yield patterns for the origin Asia Pacific: between August and November yields rose by 17 per cent to Europe, and by 10 per cent to North America,” the data company notes.

Intra-Asia Pacific air cargo suffered though. “Year-on-year volumes were down by four per cent in November, and by 1.3 per cent for the last three months. And, coupled with that, the average US$-yield in the area fell by four per cent since August.”

By contrast, cargo volumes from Africa, Europe and the Middle East and south Asia grew more than the average (by 4. 4 and two per cent, respectively), whilst volumes from the Americas contracted compared with 2014.

Some compensation came in Central and South America, where strongly growing yields between August and November (+13 per cent) were a boost.

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