b'Market UpdatesYear in Review 20192019The Global Trade Outlook and Airfreight Performance Theglobalairfreightindustrytookabeatinginthe2018lastquarterof2018.Airfreightdemandbegantolosemomentum against the backdrop of the end of restocking cycle and weakening global economic activities triggered by20182019the rising trade tensions between the worlds two largest1220192012economies, US and China in the second half of the year.2009The weak performance at the end of 2018 continued into(FTK)3.3%3.5%2019, where the decline in global airfreight demand ensued4.5% 1for the full 12 months, marking 2019 as the first year of declining freight volumes since 2012, and recording the()weakestperformancesincetheglobalfinancialcrisisin2009. Freight-tonne-kilometers (FTKs) recorded a year-on- 20190.4% 2year decline of 3.3%, a reversal of the 3.5% growth that was-registered in the year before. Global air trade, on the otherhand, showed a contraction of 4.5% 1 .6.4%Worldmerchandisetradedropped0.4% 2 in2019, exacerbatedbyglobaltradeprotectionism,geopolitical uncertainties(e.g.Brexitdevelopments)andcyclicalGlobal Market Trends: January 2019December 2019slowdown in the electronics and semiconductors industry.: 20191201912Global air trade showed weaknesses on almost all trade lanes, with Asia-US as the worst-performing lane, a corollary% YOY % growth for corresponding timespan tothetradetariffwarbetweenChinaandUS.HeavilyRepresents volume and direction of trade flow affected commodities include high technology, fashion and automotive goods. As the worlds key major manufacturing and distribution centre, Asia bore most of the brunt from themacrochallengeswithannualFTKsdecliningbya-8sizable 6.4%. -4 -1 -6 -5The US-China trade tension had also resulted in supply chain-6 -2 -3 -6 -7 -2shifts. In 2019, Asian countries such as Vietnam and Taiwan-2 -4 -1 -1 0 -6 -4had benefitted from the shift. Their growth in air exports-5into US stood at 16% and 13% 3respectively. The import-11tariffs imposed by China on US perishables has also led to China importers shifting their main source of perishables supply to other markets such as ASEAN (Malaysia (+86%), Thailand (+10%) and Indonesia (+27%)), Australia (+10%)and New Zealand (+7%) 4 . 201916%13% 3Despitethegeneralpessimisticmood,verticalssuchaspharmaceuticals and e-commerce remain resilient. Globally,[(+86%)(+10%)airpharmaceuticalstradedidnotwaverandwasflat. (+27%)](+10%)(+7%) 4Looking ahead, pharma research organisation IQVIA has forecasted industry sales to grow 4-6% annually between2019and2023,withsalesexpectedtosurpassUS$1.5trillion by 2023. On e-commerce, the continued growth inIQVIA201920234-6% e-commerce sales was evidenced by record-breaking sales20231.5duringmajoronlineshoppingfestivalsSinglesDayandBlack Friday.Towardsend2019,thereweresignsthatconfidence20192020and orders could pick up in 2020, with slight upticks in5Gthe semiconductor and electronics flows in light of latestgeneration of network developments like 5G, AI (Artificial2019(PMI)2019Intelligence) and IoT (Internet of Things).Although global502020manufacturing conditions remain weak at the end of 2019,global manufacturing PMI was marginally above 50 in the last quarter of 2019. However, the optimism was short-lived1/3/4 2 Source: Seabury ConsultingSource: CPB World Trade Monitordue to the spread of the Novel Coronavirus at the start of : Seabury : CPB2020.4 Changi Cargo Insight'