The domestic U.S. air cargo market was flat in the second quarter of 2007 and will likely remain so for the foreseeable future. But what industry experts can't seem to agree upon is whether this is a permanent shift based on changing markets trends, a seasonal anomaly or the inevitable result of a slowdown in the economy.
One thing is relatively certain. The international air cargo market for integrators and other air freight haulers is propping up the domestic side. Air freight traffic for North America was down 1.2 percent for the first six months of 2007, according to the International Air Transport Association, while the average traffic growth globally was up 2.7 percent for the period.
The competition from surface transportation, plus the fuel surcharges have also made the cost of domestic air freight unattractive to cost-conscious shippers. A so-so economy and companies trying to minimize their transportation expenses haven't helped.
"Don't expect any real growth in the domestic air freight market in the future," says Art Hatfield, an analyst with Morgan Keegan. "Ground networks are becoming much more efficient on pretty lengthy hauls." Consequently, they've become viable competitors to the integrators, not just a cost-saving alternative.
Further, many of those shippers which have shifted to ground transportation for domestic cargo won't change back to air freight even if the economy does improve. But the domestic side is expected to rebound somewhat.
"As the economy improves, you can expect the domestic air freight shipments to increase at the same rate as the GDP," says Satish Jindel, president of SJ Consulting Group.
Source: Air Cargo World, http://www.aircargoworld.com
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