WT100 Blog


Supporting Growth Trends

Even if we have the capacity, do we have the talent?

October 26, 2012

With the release of Boeing’s World Air Cargo Forecast, there is a lot of what appears to be good news to talk about. Demand for air cargo services will rise in the 20-year span of the forecast at a respectable clip – 5.2 percent per year. Given that the rate from 2001 to 2011 was 3.7 percent per year, that sounds like recovery.

But, as I remind my transportation classes, transportation is a derived demand. People don’t move freight just because there is capacity. Something has to drive them to put their freight in a vessel or vehicle and haul it somewhere else.

That’s where the underlying good news of the Boeing forecast comes in. Cost cutting can drive mode shifts, and that was certainly happening in recent years, but the global economic downturn of 2008-09 dragged down all modes of freight transportation. Boeing observed that ocean container volumes were down 9.7 percent in 2009. And, using a nautical cliché, the rising tide raises all ships. Economic growth, should improve demand for freight moves that benefit all modes.

It is no surprise that growth in the world GDP is the engine that will help the recovery and growth of the transportation sector to continue. At 3.2 percent per year over the forecast period, the world growth may sound a little lackluster. All it means is that while some regions will see very flat growth, others will see very strong numbers.

Developed economies are weighing down the world GDP. North America is expected to see 2.5 percent per year growth in GDP over the 20 years. Europe will move even more slowly at 1.6 percent. At the opposite end of the spectrum, Asia will rise at a 4.1 percent-per-year clip with China exhibiting 6.7 percent-per-year growth. In between lies Africa with a respectable 4.4 percent annual rate of growth.

Manufacturing is scalable, so there is little doubt Boeing and its counterpart manufacturers in other modes will be able to produce to demand. The problem we are left with is not something the manufacturers can build – the problem will be transportation and logistics talent. Where will we get the pilots and mechanics for all those new freighters? Where do we get the captains and seamen for the new vessels? Where do we get drivers and mechanics for trucks? Where do we get the multitude of other skill sets we need to keep supply chains functioning at their peak?

Education institutions are scalable, but the lag time is a major issue in getting the right talent into the market when and wh
 

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