Analysis and Prospect of Export Trend of Air Cargo Market before and after COVID-19

As shown in Table 1, air cargo exports before the COVID-19 have been increasing for a decade at a higher rate than total exports every year. However, air exports totaled $164.3 billion, which is a 18.5% decrease year on year, in 2019. The proportion of total exports also declined for the first time in a decade. The rate of decline is even more evident in the export weight. It increased by 36.7% year on year in 2018, while it decreased significantly by 32.1% in 2019. The fact that it accounts for more than 30% of the amount while it still accounts for less than 0.3% of the weight clearly shows that the air transport export items have become high added value.

Air cargo exports have grown at an annual average rate of about 3.5% over the past decade, which seems to be due to the expansion of the e-commerce market, the advancement of the export industry, and the diversification of the air transport market. First, the expansion of the e-commerce market shows that exports of consumer goods such as fashion goods and cosmetics have contributed significantly as the direct overseas reverse purchasing has been actively established in emerging economic economies such as China and ASEAN. In terms of the scale of the direct overseas reverse purchasing and the proportion of air transport with China, it accounted for 861.8 billion won in 2015, but it increased about 6 folds to 5,178.1 billion won in 2019. Moreover, mainly expensive and small products such as semiconductors and wireless communication devices are being exported through air transport according to the export industry advancement strategy. In addition, it was analyzed that the supply of the cargo transport market as a whole has increased due to the expansion of cargo aircrafts and the increase in demand for air passengers as the supply pattern of air transport services has also diversified.

Since the COVID-19, air cargo exports from January to April 2020 amounted to $55.8 billion, accounting for 33.7% of the total exports. This is about a 5% increase year on year. On the other hand, the total export during the same period was 166.5 billion won, which is about an 8% decrease year on year. Even after the COVID-19, air cargo exports were mainly used for light weight and expensive items. Comparing the export unit price during this period, air cargo accounted for approximately 184² times that of cargo shipping and more than about 80% of the total export of the major export items such as semiconductors, wireless communication devices, and computers used air transport. In addition, the proportion of air transport was high in exports to nearby regions centered on Asia. In particular, the proportion of air transport in exports to Hong Kong was high, since semiconductors accounted for about 68% of total exports to Hong Kong.

As shown in Table 2, in terms of air cargo exports by item, the top three items centering on semiconductors, which can be referred to as high-value products, accounted for more than 67% of the total air cargo exports as of 2019. In fact, although it decreased in 2019 from 2018, the total air cargo exports was $164.3 billion, of which the total amount of the top three items was $110.7 billion, an increase of about 19% from $93 billion in 2015, which can be analyzed that the phenomenon of export bias of certain commodities remained significant. By item, although semiconductors increased significantly in 2017 and 2018, they decreased by about 26% year on year in 2019, accounting for 56% of all air cargo, and wireless communication devices have been showing a decreasing trend since 2015.

In particular, as shown in Table 3, pesticides and pharmaceuticals have recorded a significant increase rate of over 14% per year on average over the past five years. Among them, pharmaceuticals reached $4.1 billion in 2019, with an annual average increase of 16% over the past six years, starting at $1.5 billion in 2013 through continuous technology development and product advancement. Among them, the amount of air transport was about $3.4 billion, with air transport accounting for about 83% of the total exports.

Among air exports, the top five items such as semiconductors and computers, which can be referred to has high-tech products, accounted for most of the exports at 73.3% of the total air exports. In the case of semiconductors, the largest export item, the proportion of semiconductors has continuously decreased since 2018 until recently, while the proportion of computers has increased since the COVID-19. In detail, the amount of computer exports increased by about 2.2 times from $1.68 billion to $3.76 billion year on year, and data recording media increased by about 3.5 times from $0.91 billion to $3.2 billion in particular.

As shown in Table 4, a feature of the change in the air exports since the COVID-19 is that the proportion of cargo aircrafts has increased. In the case of exports in 2019, the ratio of cargo aircraft and passenger aircraft was about 6:4, but the proportion of cargo aircraft increased by about 20% due to the recent decrease in passenger flight operations, showing a ratio of about 7:3.

As shown in Table 5, the amount of air exports by country as of 2019 was in the order of China and Vietnam, with the top five countries accounting for about 78% of the total air exports. Air exports from these five countries increased by about 25% from $101.9 billion in 2015 to $127.6 billion in 2019, and their proportion increased from 73.3% to 77.6% over the same period. China, the largest trading country in air exports, accounted for 32.4% of the total air exports, but decreased by 1.8% points year on year. On the other hand, Vietnam has grown rapidly from 4^th in 2015 to 2^nd in 2019, which seems to be due to the expansion of production lines related to semiconductors and mobile devices.

Even after the COVID-19 outbreak, the amount of air exports remained high mainly in Asia, which is in a relatively short distance. Air exports to the top five countries such as China and Hong Kong accounted for the majority of exports at about 76.2% of the total. In particular, in the case of Hong Kong, air transport accounted for about 84% of the total export amount of $10.2 billion, of which about two-thirds were semiconductors. However, in the case of China, the proportion has been gradually decreasing since 2018.

Immediately after the recent spread of the COVID-19, cargo transport costs temporarily surged due to the decrease and suspension of passenger flights. However, the cost of short-/medium-haul cargo transport has been gradually stabilizing as many airlines expanded their cargo aircrafts supply to secure profitability. In particular, as shown in Table 6, although the cost of short-/medium-haul cargo transport rose temporarily immediately after the COVID-19, it is analyzed that transport costs have reached a stable stage as the supply of cargo aircrafts increased mainly in Asia. In detail, transport costs at Shanghai and Hanoi airports are recovering to pre-COVID-19 levels, while transport costs at Singapore airports remain high.

On the other hand, as shown in Table 7, for long-hauls, transport costs skyrocketed nearly five folds immediately after the COVID-19, and the cost still remains high due to the limited supply of cargo aircrafts. However, there is sufficient possibility of a drop in transport costs as demand may decrease due to the efforts of airlines to supply additional cargo aircrafts to recover profitability and the prospects of continued economic contraction in major exporting countries.