Question

Read The Question & Answer. Do You Agree With The Answer? Why Or Why Not. Explain.

Question: Do you think that the demand for air cargo will increase or decrease over next three years? Why

Answer: Air transport has traditionally been deemed expensive compared to sea transport. However, in recent years, there has been a consistent increase in air cargo demand. This upward trend has been caused by the rise of e-commerce platforms, such as Amazon, Alibaba, and Jumia (Report Linker, 2020). Amazon has begun dominating the supply chain through programs such as Amazon Flex and Amazon Air to rival the dominant FedEx. Notably, increased globalization has also liberalized most economies, making demand shift to cheaper goods with minimal compromise on quality. As a result, the Asian markets have become economic hubs as they provide cheap labor, bringing down the production costs as well as the overall costs of the products. In addition to costs, the consumers are also becoming increasingly attached to convenience and fast deliveries, making air transport rise in demand. Based on the costs, competition, and consumer convenience, air cargo demand is set to rise over the next five years. According to the International Air Transport Association (2020), the demand as measured using cargo tonne-kilometers (CTKs) has been consistently rising since 2010, rising from an average of 13 billion CTKs to about 22 billion CTKs towards the end of 2019. This was interrupted by the COVID-19 pandemic, but the demand has not fallen to as far as 2010. This is a positive indicator that despite the disruption, air cargo demand is gaining traction. According to Report Linker (2020), the US's cargo volumes grew by 4.1% in 2018 to 63.7 million metric tons. This increased to about 65.9 million metric tons in 2019, with forecasts predicting further growth. Therefore, based on these statistics and the pandemic notwithstanding, air cargo demand will continue to rise in the next three years due to preference of speed, flexibility, relatively cheaper costs due to competition, and the influx of e-commerce.

Answer 1

I completely agree with the answer provided as the logical explanation and the theoretical understanding behind the reason of increase in demand for Air Cargo is substantially justified with the statistics provided in the answer. The increase in the supply of services provided by firms like Amazon, FedEx, induces demand and hence is a completely valid explanation.

Globalization as one of the reasons is very accurately presented which definitely affects demand for goods from all over the world which again stimulates the demand for air transportation.

All the rest of the information is relevant and hence completely justifies the increase in demand for Air Cargo in coming years.