AN ECONOMETRIC ANALYSIS OF AIR CARGO LOGISTICS DEVELOPMENT: EVALUATING THE IMPACT OF SMALL AND MEDIUM ENTERPRISE (SME) INTEGRATION ON SECTORAL GROWTH
Keywords:
air cargo logistics; SME integration; freight tonne-kilometres; VECM; cointegration; transaction cost theory; last-mile; digitalization; developing economies.Abstract
This paper investigates the long-run and short-run dynamics linking the integration of Small and Medium Enterprises (SMEs) to the development of the air cargo logistics sector in a transition economy. Drawing on annual time-series data for the period 2010–2025, we estimate a four-regressor cointegrating relationship in which Air Freight Turnover (FT) is modelled as a function of the SME participation rate in logistics (SMEₚ), Gross Domestic Product (GDP), infrastructure investment proxied by the cargo-dedicated aircraft fleet (INF), and a Digitalization Index (DI). The Augmented Dickey–Fuller (ADF) test confirms that all series are integrated of order one. Engle–Granger residual-based testing and a Vector Error Correction Model (VECM) reveal a stable long-run cointegrating equilibrium with an adjustment coefficient of −0.975 (statistically significant at the 1% level), indicating that approximately 97.5% of any short-run disequilibrium is corrected within a single annual period. Output elasticities are positive and economically meaningful for GDP (0.347), Digitalization (0.376), and SME integration (0.236), and Granger-style causality testing supports a unidirectional flow from SME participation to freight turnover (F = 5.33). Interpreted through the lens of Transaction Cost Economics, the findings are consistent with the hypothesis that the entry of small enterprises as agency-model intermediaries between trunk carriers and end-shippers reduces last-mile coordination costs and elevates the flexibility of the aggregate logistics function. The paper closes with policy recommendations for developing economies, emphasizing aviation-market liberalization, regulatory simplification of forwarding licences, and targeted digital-infrastructure subsidies as catalysts for export-led growth.
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