enroute AIR FREIGHT
What’s more, last summer’s massive spike in oil prices forced businesses to re-examine their offshore
production strategies and the just-in-time inventory management
model that relied on air to rush
goods to market over long distances. And ever-increasing security
regulations have layered additional
costs onto an already premium-priced service.
While there may be multiple reasons for the weakness in air freight,
there appears to be just one remedy:
a global economic rebound. But
opinion is divided on whether even
that would be enough to turn the
industry’s fortunes around.
The Boeing Co., for instance,
remains confident in air freight’s
long-term prospects, projecting that
global air-cargo traffic will grow by
5. 4 percent a year over the next 20
years. “The air cargo industry is
supported by sound fundamen-
5.0%
historical air share in the trans-Pacific: 1999–2008
(air of total weight on Asia–U.S. lanes)
Top 1,000 airborne commodities (covers 95 percent of total air weight)
2.5% 3.0% 3.5% 4.0% 4.5%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
AIR FREIGHT AS A PERCENTAGE OF THE TOTAL WEIGHT OF U.S. IMPORT TRADE FROM ASIA HAS DECLINED
BY NEARLY 39 PERCENT FROM 1999 THROUGH 2008. THE 10-DAY LOCKOUT AT U.S. WEST COAST PORTS
IN 2002 AND SERIOUS PORT CONGESTION IN 2004 ALLOWED AIR TO GAIN OR MAINTAIN SHARE RELATIVE
TO OCEAN TRANSPORT. SINCE THEN, SOARING FUEL PRICES HAVE SPARKED A MAJOR SHIFT FROM AIR
TO OCEAN.
SOURCE: U.S. COMMERCE DEPARTMENT, MERGEGLOBAL INC.
tals—the imperative for speed, consumer product innovation, and
global industrial interdependence
are key drivers—and new air trade
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routes will expand service coverage,” said
Randy Tinseth, vice president, marketing of
Boeing’s commercial airplanes unit, in a
statement.
Others beg to differ. As they see it, a global economic recovery will not alter the
structural changes taking place that will
work against air freight’s growth.
For one thing, lower production costs
spurred by globalization and improved
information technology have led to reductions in the average value of many commodities. “The impact of generalized price
deflation will continue to depress the rate
of air cargo growth,” said Brian P. Clancy,
managing director of Arlington, Va.-based
consultancy MergeGlobal Inc., in a report.
Price deflation typically forces managers
to cut transportation costs to stay competitive. As the most expensive transport mode,
air is at a disadvantage to lower-cost alternatives like ocean on international trade
lanes, and to truck and intermodal services
in the domestic U.S. trades.
“Our customers are asking why they
should pay five times more for air freight
than for ocean just to save 10 days,” says
Julian Keeling, a 35-year industry veteran
and founder of Los Angeles-based
Consolidators International. Consolidators’ business was built around negotiating
cargo space aboard aircraft for small to
mid-sized freight forwarders. Today, ocean
shipping is the fastest-growing part of
