BY MARK B. SOLOMON, SENIOR EDITOR
AIR FREIGHT
enroute
the end of air freight
(as we’ve known it)
Battered by
recession and
facing new rivals
for the global
shipping dollar,
air freight
contemplates a
clouded future.
NO SECTOR OF TRANSPORTATION HAS BEEN IMMUNE TO THE EFFECTS OF THE
global economic downturn. But perhaps no industry has taken it on the chin with greater
ferocity than has air freight.
The worldwide collapse of air traffic, which began late last year and has extended into
2009, is unprecedented in the industry’s 60-plus years of existence. December 2008 volumes reported by the International Air Transport Association (IATA) fell by 22. 3 percent
over December 2007. Year-over-year volumes dropped by more than 20 percent in each
of the next four months before showing a slight improvement in May and June, when
they declined 17. 4 percent and 16. 5 percent, respectively.
The consensus is that the market has stabilized at current levels. But that is little solace
for an industry long accustomed to annual growth in the high single digits to low double digits. And while things may improve somewhat as the year progresses, there isn’t
much hope for a recovery before 2010.
Earlier this year, IATA predicted 2009 volume declines of 13 percent, and in June, the
group revised its forecast downward to 17 percent. That may be a little optimistic: Swiss
freight forwarding giant Panalpina predicts a 19-percent year-over-year contraction, noting that its forecast includes data from freighter operators that aren’t included in IATA’s
tabulations.
Stiff headwinds
It doesn’t take a Harvard M.B.A. to understand what’s going on. The recession has been
global in scope, and air freight’s primary value is in connecting global supply chains.
Companies are not only shipping less, but many also now have a viable alternative to air
in the form of less-than-containerload (LCL) ocean services that are cheaper, faster, and
more reliable than ever before. Today, companies ranging from parcel carriers UPS and
DHL to traditional truckers like Con-way, Old Dominion Freight Line, and Averitt
Express are playing in the LCL market or plan to soon enter the fray.
