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Policy Pulse

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Join our readership of thought leaders and policy makers by subscribing to Policy Pulse, an update on trending policy issues in climate change, international conflict economics and infrastructure. 

Forecast vs. Actual: air cargo in 2019 and 2020

Policy Pulse - George Anjaparidze - 10 February 2020

We got 3 out of 4 predictions right for air cargo performance in 2019 (see table). While not perfect, it is far better than established industry forecasters.


Table: Air cargo 2019 forecast vs. actual

Source: Forecast performance is based on Veritas Global forecast, actual performance is based on IATA reporting of year end data and IHS Markit high frequency indicators.


For 2020, we expect air cargo traffic performance to grow by about 3% to 4%


On the macroeconomic front we expect to see positive lagged effects in 2020 from monetary policy easing we saw in 2019. High frequency indicators show the global economy continued to accelerate in January 2020 for the third straight month. However, trade performance has struggled to recover. Overall trade tensions are easing but trade relationships have not normalized and are unlikely to in the foreseeable future. Decisions by some central banks to pursue less loose monetary policy in early 2020, if further tightened, add downside risks to our forecast.


One-off factors and policy risks also influence our outlook. The coronavirus outbreaks have disrupted supply chains and on-net we expect this to have a favorable impact on air cargo demand. However, the sector faces unprecedented level of policy risks.


Policy issues in 2020 will have a major impact on air cargo demand this year as well as the more distant future. In addition to trade tensions, negotiations at the WTO will specifically impact air cargo performance, including negotiations on whether to extend the customs duties moratorium on international e-commerce, compliance with tariff policies of the Information Technology Agreement and implementation of the Trade Facilitation Agreement. Negative outcomes of these negotiations add downside risks to our forecast.


Furthermore, growing consumer awareness on climate change will chip away at demand, especially if industry is unable to improve perceptions and sustainability credentials of the air cargo product.


About Veritas Global: Our vision is to have a positive impact on the world through truthful advice informed by robust analysis. We are a premier provider of tailored solutions on climate change, international conflict economics and infrastructure.


 
 
 

Skillful disclosure helps leaders to tackle responsible strategy

Policy Pulse - 17 December 2019 - Daniela Costea


Urgent changes are needed to meet the goals of the Paris Agreement, “decarbonizing” the economy by 2050.


However, considering the demographic trends, global urbanization and economic stability, setting a carbon-free policy in the very near future can be more an aspiration than a target for certain countries. While major emitters should reach net-zero greenhouse gas emissions by 2050, developing countries have historically contributed little to greenhouse gas emissions but most developing states require carbon-intensive investments to reduce poverty.


Industrialization, while it is important for the economic growth and development of a society, can also be harmful to the environment.  Climate change may affect the business in a number of ways, so in response we must adapt the business to climate change. This implies quantitative analysis of company’s portfolio, as well as qualitative scenario analysis, assessing the risks and opportunities associated with climate change.


How to integrate climate-related information within existing reporting practices


The reporting landscape is evolving. There is a continuous development of climate-related reporting, in addition to wider sustainability reporting.


Reporting for climate change is diversified, with many requirements, having different purposes and different audiences which bring complexity.


The Corporate Reporting Dialogue (CRD) - is a platform that brings together few organizations (e.g. GRI, IIRC, CDSB, CDP) focusing on alignment across the reporting frameworks and standards.


In June 2017, the Task Force on Climate-related Financial Disclosures (TCFD) presented its recommendations concerning climate-related information. This is a general reporting framework for all types of organizations.


The Task Force structured its recommendations around a matrix with four areas:

  • Governance

  • Strategy

  • Key indicators (metrics and targets)

  • Scenarios planning for the future (risk management)

Source: 2019 Status Report - Recommendations of the Task Force on Climate related Financial Disclosures.


These disclosures are important for decision-making purposes and certainly the materiality is a key element.


The disclosure of climate-related financial information is growing, already adopted by many companies- yet the process must be accelerated. Implementing the TCFD recommendations is a true journey, below are some key takeaways with significant potential to set global reporting precedents.


Key takeaways (+/-):

Source: Based on 2019 Status Report - Recommendations of the Task Force on Climate related Financial Disclosures.


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About the author: Daniela Costea has extensive experience in reporting, strategy and finance. Her passion is to help pioneer the integration of sustainability to improve decision making.


About Veritas Global: Our vision is to have a positive impact on the world through truthful advice informed by robust analysis. We are a premier provider of tailored solutions on climate change, international conflict economics and infrastructure. 




 
 
 
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