Air Cargo's Impact on the Global Economy

The impact of Air Cargo on Global Economy
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The impact of Air Cargo on Global Economy
Air cargo refers to the transportation of goods by an aircraft ranging from mail, air express services and the transportation of large goods. These goods can be transported in a passenger aircraft, cargo aircraft or a combi-aircraft. Air cargo services shrink time and space to link customers to distance sources quickly, efficiently, and in a reliable way (Aerotropolis.com, 2015). Air transport, therefore, contributes to economic development by enabling the movement of passengers and goods across borders, irrespective of the distance.
About 29.9 percent of international transportand about 34.6 percent of air tradeis done by the air cargo industry and it produces annual revenue of $2.7 trillion according to a survey done in 2004. From estimation, 20 percent of manufactured goods that are traded across countries and continents show an increase of up to 80 percent in the next five years. The air cargo industry is therefore expected to grow rapidly at a rate of 5.9 percent in 20 years.(Aerotropolis.com, 2015). At this rate, the air cargo industry is bound to experience tremendous profits in their daily operations that will result in an improvement in the global economy.
The major challenge faced by the Air cargo industry is the cost of fuel. The average cost of a gallon of jet fuel has more than doubled, from $0.75 per gallon in 2001 to $2.01 in the first seven months of 2006, which is the equivalent of about $68 a barrel on average in 2014. At one point, jet fuel prices reached as high as $2.50 a gallon (Inboundlogistics.com, 2015). This however does not prevent the cargo industry from impacting the economy positively, since the revenue from cargo services ranges from 8% to 12%. In reality, this is a high amount,considering the battle with the ...