The U.S. transportation industry will experience at least one more year of muted growth, The Colography Group, Inc. said today in releasing a mid-year update to its annual projections for growth in the $101.2 billion U.S. expedited cargo market.
Using its most-likely case scenario, The Colography Group estimates that just under 120 million new shipments will be added to U.S. expedited commerce in the coming year, with ground parcel and air export services accounting for virtually all new expedited shipping volume. Total U.S. expedited cargo revenue in 2010 is expected to be 6.5 billion above 2009 levels, a rate of growth that, on a constant dollars basis, is roughly in line with consensus forecasts for total U.S. economic growth.
Activity in the U.S. domestic air market will continue to suffer throughout 2010, with shipment volumes falling 1.1% from projected 2009 levels. The air export category, influenced by a different suite of demand drivers, will rebound during 2010, growing at a more “normal” 6.1% in total shipments, year-over-year.
Weakness in 2010 domestic air activity will continue to be most pronounced in the overnight delivery segment, with slight declines in package and freight shipments, and a significant year-over-year decline in overnight letter shipping. Further, overnight demand, perhaps the most critical (from a yield perspective) piece of U.S. expedited cargo demand, continues to be pressured by growth in e-mail usage and the migration of package and freight traffic to the ever-expanding service coverage of surface transport.
In a trend not seen for some time, non-integrated air carriers (forwarders, combination airlines, postal services and other intermediaries) will take share of the U.S. domestic air market from their integrated carrier rivals, the result of a lower rate of decline. Further, the non-integrated carriers will also gain share in U.S. air export shipment share in 2010.
“The secular factors driving traffic off airplanes and on to trucks will continue at least through 2010, exacerbated by a relentless need of shippers to lower costs in the face of a recession that lingers on,” said Ted Scherck, president, The Colography Group. “Businesses are increasingly reluctant to pay a premium for overnight air service and continue to build their inventory and distribution models around more economical, time-definite deliveries moving in ground parcel, LTL and TL (including renewed interest in private fleets). Further, inter-modal carriers are responding by putting virtually all new investment of time and money into expanding their surface capabilities.”
Among the key findings of The Colography Group’s U.S. Expedited Cargo Market Projections For 2010:
• The average U.S. domestic expedited cargo shipment will weigh 28.5 pounds in 2010, and will produce point-of-sale carrier revenue of $16.99. Revenue per pound (yield) will be $0.60, as compared to $0.57 this year.
• Despite the generally negative economic news of the past couple of years, and the freight recession it caused, there are several segments of the market that continue to grow robustly, mostly in segments of the market that serve a specific, often costly (to the shipper) need. This includes such areas as returns processing, on-line retail and regional fulfillment, among others.
• The explosive growth of e-commerce has forced suppliers ever closer to their customers. Traditionally, businesses designed their distribution programs around pre-determined national distribution points that “pushed” product into the market. The Internet has turned that traditional model upside down. Today, customers control the order flow with suppliers and manufacturers no longer able to control where their customers are going to be located. As a result, vendor distribution networks are increasingly regional, with multiple points of end consumption, especially when the value-per-pound of the goods is too low to justify a high-cost distribution system.
• The ongoing surge in non-discounted ancillary fees, sometimes known as accessorials, continues to drive up prices, often dwarfing more modest increases in base rates. This runs contrary to shippers’ immutable need to lower costs, and risks shipper backlash.
About The Colography Group, Inc.
In its 26th year, The Colography Group, Inc. (www.colography.com) delivers primary research, strategic planning and new program development services to businesses and governments looking to identify and capitalize on growth opportunities in the global time-definite, or expedited, cargo market. Its suite of proprietary databases is based on information and insight gained from detailed interviews with hundreds of thousands of shippers. Through these interviews, The Colography Group extracts market intelligence that clients use to effectively plan their transportation strategies. The Colography Group is based in Atlanta, Georgia, USA. For More Information: Contact Ted Scherck At (678) 385-2500
Using its most-likely case scenario, The Colography Group estimates that just under 120 million new shipments will be added to U.S. expedited commerce in the coming year, with ground parcel and air export services accounting for virtually all new expedited shipping volume. Total U.S. expedited cargo revenue in 2010 is expected to be 6.5 billion above 2009 levels, a rate of growth that, on a constant dollars basis, is roughly in line with consensus forecasts for total U.S. economic growth.
Activity in the U.S. domestic air market will continue to suffer throughout 2010, with shipment volumes falling 1.1% from projected 2009 levels. The air export category, influenced by a different suite of demand drivers, will rebound during 2010, growing at a more “normal” 6.1% in total shipments, year-over-year.
Weakness in 2010 domestic air activity will continue to be most pronounced in the overnight delivery segment, with slight declines in package and freight shipments, and a significant year-over-year decline in overnight letter shipping. Further, overnight demand, perhaps the most critical (from a yield perspective) piece of U.S. expedited cargo demand, continues to be pressured by growth in e-mail usage and the migration of package and freight traffic to the ever-expanding service coverage of surface transport.
In a trend not seen for some time, non-integrated air carriers (forwarders, combination airlines, postal services and other intermediaries) will take share of the U.S. domestic air market from their integrated carrier rivals, the result of a lower rate of decline. Further, the non-integrated carriers will also gain share in U.S. air export shipment share in 2010.
“The secular factors driving traffic off airplanes and on to trucks will continue at least through 2010, exacerbated by a relentless need of shippers to lower costs in the face of a recession that lingers on,” said Ted Scherck, president, The Colography Group. “Businesses are increasingly reluctant to pay a premium for overnight air service and continue to build their inventory and distribution models around more economical, time-definite deliveries moving in ground parcel, LTL and TL (including renewed interest in private fleets). Further, inter-modal carriers are responding by putting virtually all new investment of time and money into expanding their surface capabilities.”
Among the key findings of The Colography Group’s U.S. Expedited Cargo Market Projections For 2010:
• The average U.S. domestic expedited cargo shipment will weigh 28.5 pounds in 2010, and will produce point-of-sale carrier revenue of $16.99. Revenue per pound (yield) will be $0.60, as compared to $0.57 this year.
• Despite the generally negative economic news of the past couple of years, and the freight recession it caused, there are several segments of the market that continue to grow robustly, mostly in segments of the market that serve a specific, often costly (to the shipper) need. This includes such areas as returns processing, on-line retail and regional fulfillment, among others.
• The explosive growth of e-commerce has forced suppliers ever closer to their customers. Traditionally, businesses designed their distribution programs around pre-determined national distribution points that “pushed” product into the market. The Internet has turned that traditional model upside down. Today, customers control the order flow with suppliers and manufacturers no longer able to control where their customers are going to be located. As a result, vendor distribution networks are increasingly regional, with multiple points of end consumption, especially when the value-per-pound of the goods is too low to justify a high-cost distribution system.
• The ongoing surge in non-discounted ancillary fees, sometimes known as accessorials, continues to drive up prices, often dwarfing more modest increases in base rates. This runs contrary to shippers’ immutable need to lower costs, and risks shipper backlash.
About The Colography Group, Inc.
In its 26th year, The Colography Group, Inc. (www.colography.com) delivers primary research, strategic planning and new program development services to businesses and governments looking to identify and capitalize on growth opportunities in the global time-definite, or expedited, cargo market. Its suite of proprietary databases is based on information and insight gained from detailed interviews with hundreds of thousands of shippers. Through these interviews, The Colography Group extracts market intelligence that clients use to effectively plan their transportation strategies. The Colography Group is based in Atlanta, Georgia, USA. For More Information: Contact Ted Scherck At (678) 385-2500
