In Donald Trump we trust?
18 / 01 / 2017
The one thing everyone can agree on about US President-elect Donald Trump is that he divides opinion.
Some see him as an astute businessman who will help de-regulate America and allow it to build and manufacture its way out a slump that has seen real household income stagnate despite GDP continuing to grow.
Others see him as a flawed character who favours trade barriers and protectionism that will create economic problems and that he will reduce the role the US plays on the world stage, a move which will create instability across the globe.
Both of these paragraphs could have been continued to fill up the entirety of this article, but it is interesting to drill down into how the aviation and logistics industry has responded to Trump’s election win.
US aviation bodies and unions appear to be fairly positive about Trump’s win, hoping that he will invest in infrastructure and protect US airline jobs by stopping foreign airlines from launching services.
One recent example is the unions’ reaction to the approval of a foreign carrier permit for Norwegian Air International, a move that unions claim will result in job losses at US airlines.
The US Air Line Pilots Association, International (ALPA) appealed to Trump. ALPA president Tim Canoll says: “This flawed action is a lasting legacy of the Obama administration and demonstrates an egregious lack of support for working men and women in this country.”
He adds: “We are pleased with US President-elect Donald Trump’s stand on trade, and we look forward to working with the next administration to safeguard US jobs.”
Trump’s stance also raises questions over what his approach will be to the various open skies agreements that the country has signed, with the dispute between US carriers Delta, American, and United and the Middle Eastern airlines Qatar, Emirates and Etihad being one obvious area of tension.
There were also positive noises about investment in infrastructure.
Trump, in his nomination acceptance speech and during his campaign, put forward a $1trn plan to improve infrastructure as part of a first 100 days priority, recognising it as a growth engine for creating high-paying, skilled jobs.
Nicholas Calio, president and chief executive of US airline trade body Airlines for America (A4A), says: “The current US Air Traffic Control system, while safe, is an inefficient relic of the 1940s. We’re eager to work with President-elect Trump to transform it to reduce delays for the 2.2m passengers and 50,000 tons of cargo that fly every day.”
The promise of investment in infrastructure was also welcomed by the US Airforwarders Association (AfA).
Executive director Brandon Fried says in a statement issued shortly after Trump’s election win: “We wholeheartedly agree with President-elect Trump’s desire to build the next generation of roads, bridges, railways, tunnels, seaports, and airports.
“We firmly believe that infrastructure investment right out the gate will have the most direct impact on US citizens and businesses and will demonstrate that bipartisanship can work for all Americans.
“Time is money in our business, and a better infrastructure equates to cost savings, more profits and ultimately the creation of more jobs in our industry. As a businessman, Mr. Trump gets the nexus to our industry.”
However, Trump’s election arguably puts freight forwarders in a difficult position; on the one hand improvements to infrastructure will speed up the movement of cargo but on the other moves to scrap trade partnerships could result in a reduction in international shipments.
In response to this, Fried tells Air Cargo News: "While forwarders applaud the president elect’s stance on infrastructure investment, such expenditure will not achieve its full purpose without robust trade with other nations.
"We, therefore hope that Mr. Trump’s stance against trade agreements is merely campaign rhetoric and that once in office, his administration will pursue workable pacts that will increase trade activity among our trading partners.
"We all know that in this age of digital technology and efficient transportation systems, the global marketplace creates inter-dependency with other nations where distance is no longer an impediment to trade.
"We must now pursue fair and workable harmonised customs regulations that speed processing by leveraging technology to assure the smooth and efficient flow of commerce between countries."
So far Trump has been critical of trade agreements and it appears that the US will renegotiate or withdraw from the North American Free Trade Agreement and it will withdraw from the TPP.
Logistics portal Freightos’ chief executive, Zvi Schrebier, says that withdrawing from the TPP would do the US – and trade in general – more harm than good.
“President-elect Trump promised to nullify the TPP on his first day in office,” he says. “Free trade agreements and shifting labour costs continue to move manufacturing and exports from China to Southeast Asian countries like Vietnam.
“Instead of improving global trade, cancelling TPP will hinder shifting manufacturing patterns, bolster China’s export industry, and hinder the continuation of the rapid growth of Vietnam’s economy.
“Vietnam and other countries that export to the US were not destined to be the TPP’s only benefactor; US exports have continued to grow, with exports to Vietnam exploding by 473% in the last decade.
“With over $1.2trn of goods imported to the US from the 10 non-North American (TPP) signatories in the past five years, the ultimate price for canceling the TPP will be paid by US consumers who will face higher prices.”
The major US integrators are arguably equally as torn as forwarders; positive about infrastructure spending to improve transport networks and moves to boost small and medium-sized US businesses – a large group of users of their services – but perhaps also concerned about the impact of trade barriers for their international business.
Speaking to CNBC, UPS chief executive David Abney is positive, looking forward to a reduction in regulations – tax, environmental, healthcare – which he says could overburden small businesses, UPS’ customers. Abney also welcomes infrastructure spending.
Only time will tell how Trump’s presidency affects the aviation and logistics industries and the wider US economy, but it is likely to be an interesting journey and will certainly bring the benefits and pitfalls of globalisation into focus.