Air Cargo Management Group’s (ACMG) newly-released International Air Freight and Express Industry Performance Analysis 2008 provides fresh insight and a detailed assessment of the international air cargo/express industry and the companies that compete in this evolving market. Published annually since 1994, the 200-page study provides the only comprehensive quantitative and qualitative independent analysis of this global industry, including:
·         Trends in international shipping services
·         Statistical analysis of freight and express package traffic
·         Strategic reviews of the major express companies, freight forwarders, all-cargo and combination passenger/cargo airlines
·         Up-to-date discussion of freighter aircraft trends, and the impact of declining traffic volumes
·         Analysis of ongoing air freight developments in China, India, and the Middle East
ACMG’s new study found the year just ended to be one of the most challenging ever for participants in the global airline industry. First came record-high fuel prices, followed by recession-induced traffic declines. Air cargo traffic levels showed modest year-over-year increases through mid-year, but turned decidedly negative later on. “All indications are that international air freight for 2008 will show a decline of 2%-4% compared to the results for 2007,” said Robert Dahl, ACMG Managing Director. “November results showed double-digit declines, and early reports indicate that the December figures will come in even lower.”
Those looking for a turnaround in 2009 are likely to be disappointed, as global air freight traffic is expected to drop another 5% before a recovery begins in 2010. “This is clearly disappointing news for an industry where 6% annual growth is the norm,” commented Dahl. “On the other hand, air freight tends to be a leading economic indicator, so when the recovery does come air freight companies will be among the earliest beneficiaries.” Over the long term economists predict global GDP will exhibit 3% annual growth, and ACMG finds that this, coupled with further globalization, will support a return to 6% average annual growth for air freight.
“Combined annual revenue for participants in the international air cargo market (airlines, forwarders, and express companies) now exceeds $87 billion based on results for the most recent financial year. The revenue total was pushed up more than 10% by traffic growth (prior to the recent decline), coupled with higher fuel surcharges and currency exchange rate trends,” Dahl noted. “Things to watch for in 2009 include further consolidation in the airline, freight forwarding and express sectors, and more concern about shippers switching to the ocean mode as they seek to cut their transportation costs. Hopefully by mid-2009 we will see the first signs of a market recovery, although we don’t expect a major turnaround in the near term.”
Other Key findings:
·         Express companies have fared somewhat better than airlines in the current weak cargo market, but even express traffic has declined in recent months, and some retrenching is apparent in the express group, including the deferral of freighter deliveries and some planned reductions in air operations.
·         International express grew just 1.4% to reach 2.144 million shipments per day in mid-2008; growth in this sector has averaged 9.5% per year since 1992, but a less impressive 6.3% per year since 1997. UPS now has the largest share of the international air express market at 24.7%, followed closely by DHL and FedEx, with TNT and the Express Mail Service of the Universal Postal Union rounding out the top-five.
·         Despite gains by the express companies, airlines and forwarders retain control of 89% of the tonnage of air cargo handled in the international market. The non-express carriers in the combination and all-cargo groups together have 46% of market turnover (about $40.1 billion), with freight forwarders having an additional 17% ($14.8 billion). Leading airlines in Asia generate nearly one-third of their revenue from cargo.
·         ACMG finds that interest in freighter aircraft remains high, with more than 300 orders on the books for new and converted widebody freighters. However, an over capacity situation is likely to develop in 2009 given the expectation for continuing weak air freight demand.
The 200-page ACMG report provides extensive coverage of the performance of the express companies, all-cargo and combination carriers, and freight forwarders that serve the international air freight market, and describes the strategies being employed by more than 50 individual market participants. Additional commentary and analysis is provided on a wide range of related topics, including airline alliances, open-skies pacts, and freighter aircraft trends, among others.
Air Cargo Management Group, Aviation Consultants, Contact: Robert Dahl, 520 Pike Street – Suite 1010, Seattle, WA 98101. To order, or to obtain more information, visit ACMG’s website, or call Robert Dahl at 1-206-587-6537.
Founded in 1978, ACMG is a specialized aviation consulting firm, which focuses on freighter aircraft and all aspects of the worldwide air freight and express industry.