www.dcvelocity.com MAY 2016 DC VELOCITY 33
BY MARK B. SOLOMON, EXECUTIVE EDITOR–NEWS
AIR FREIGHT
transportationreport
WORLDWIDE PASSENGER TRAFFIC IS AT FIVE-YEAR
highs. Aircraft orders hit a record in 2014. Jet fuel prices are
at multiyear lows. For the airline business, which has lived a
feast-or-famine existence for nearly 40 years, it is belly-up-to-the-table time.
But what puts smiles on the faces of airline executives
is the stuff of headaches for the airfreight sector. That’s
because those trends have contributed to putting additional
belly capacity in the air, which, in turn, suppresses freight
yields, the revenue generated for flying one ton of freight
one mile.
Global yields are expected to fall 6 percent in 2016, con-
tinuing a downward pattern that began in 2012, the trade
group International Air Transport Association (IATA) said
recently. Chicago-based plane maker Boeing Co., which
publishes a biennial global cargo forecast that will be next
updated in the fall, estimates the yield on so-called general
freight, which doesn’t include the higher-yielding express
consignments moved by companies like Memphis, Tenn.-
based FedEx Corp., Atlanta-based UPS Inc., and Bonn,
Germany-based DHL Express, is today around $1.90 a kilo,
down 15 to 20 percent from a year ago.
Belly freight is unique because it is priced as a byproduct
of another form of transportation, namely passenger service. Belly rates are traditionally cheap because the plane
has to fly anyway, and passenger revenues absorb much
of the allocable crew, fuel, and maintenance expense. The
large injection of belly capacity in the past two years has
further driven down prices. This benefits forwarders in
their dealings with carriers but hurts them on the selling
side with price-conscious shippers.
Air forwarders of all sizes are pushing to add value to
Strong passenger demand puts more planes and belly lift in the air,
suppressing freight yields for carriers and freight forwarders.
Air freight’s “belly” ache
