Thursday, February 21, 2013

Air Freight Up and Down:

Skies are partly cloudy in outlook for air freight carriers.

2012 was an up and down year for the air cargo industry, as carriers fought economic headwinds and a glut of airplanes chasing elusive shipments.

The international air cargo industry is struggling under the weight of an issue familiar to its cousin on the sea: overcapacity. Its nature largely international, air freight has struggled as the eurozone fiscal crisis and middling economic recovery in the U.S. put pressure on demand for exports out of Asia, especially China. And, with shippers putting ever more emphasis on cost-cutting, more traditional airborne products are shifting to other modes of transportation. The exceptions, of course, are high-value products such as Apple iPhones and iPads that tend to create temporary spikes in volume and underpin the industry.

With labor disputes heating up on the ocean side of freight transportation, however, the air cargo industry closed 2012 on a strong note as shippers wary of having their goods tied up at anchor shifted to air. That could provide some momentum for this year, just as a new fleet of widebody planes with more expansive freight capacity enters the market.

In the wake of Boeing’s ongoing problems with lithium ion batteries on their new Dreamliner, the International Civil Aviation Organization has prohibited the shipment of lithium ion aircraft batteries as cargo on passenger flights. UPS was turned down by European regulators in its quest to acquire Euro-centric TNT Express, but the American Airlines-US Air merger adds to airline consolidation in this country.

Over half of the world’s leading cargo airports saw declines in business in 2012, but the busiest, Hong Kong and Memphis, were up 2.2 to 2.5 percent. Total air freight movements contracted 0.2 percent vs. 2011, contrasted to a 3.9 percent rise in global passenger traffic.

This mixed bag of indicators has created opportunities in pricing for air freight shippers, with some consigners and forwarders opting for the spot rate market. What’s the best bet for your goods? If your answer is up in the air, then give us a call. TOTALogistix has put together a number of solutions for our clients that address the air freight conundrum.

Kirk Shearer
800-989-0054 x103


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