MIAMI – After five years of false starts and discouraging setbacks, the recent string of positive economic indicators for the cargo industry from IATA, ACMG, Boeing, Airbus and others at the start of peak season gave the opening session of the Cargo Facts Aircraft Symposium at the Fontainebleau Hotel in Miami a buoyant feel yesterday.
Speaking at the session “Air Freight Update – Cargo Regains Altitude,” Shawn McWhorter, president-NCA Americas, for Nippon Cargo Airlines, urged any remaining doubters to look at the big picture. “What’s happening now is real,” he said. “Since late 2013, we have seen slow, sustained growth and trans-Pacific growth. This didn’t come out of nowhere, and it’s not a one-time blip. It’s not worldwide, but the last three years have shown signs of real recovery.”
Panelist Daniel Bleckmann, regional director, South America, Caribbean and Florida, for Lufthansa Cargo, said that Asia has shown “pockets of significant growth,” and more positive signs in the oil and gas industry. “The outlook for the peak season is encouraging. We’re cautiously optimistic.”
McWhorter said NCA, which operates six 747-400s and five 747-8Fs (plus three more -8s to be delivered by the end of the year), has “requests going unmet because forwarders didn’t buy enough capacity at peak season. That’s unheard of over the last few years.” He also cited two other positive developments: FedEx’s announcement that their peak this December is expected to be their “biggest ever,” and UPS’s decision to raise its prices by 4.5 percent.
“It’s been a very good year for freight,” agreed panelist Michael Steen, executive vice president and chief commercial officer for Atlas Air Worldwide Holdings. “Express has had very healthy numbers for quite some time.” He also added that demand for cargo capacity has outpaced supply in some regions for the first time in three or four years.
“This will not be a traditional peak season – it will not be based on a product release,” Steen said. “But we’re already seeing good growth in the fourth quarter as we speak.”
“We’re not likely to return to where we were eight years ago, but we’re cautiously optimistic,” said Doug Brittin, secretary general of The International Air Cargo Association (TIACA).
In some ways, the global economic crisis of 2008 may have prepared the industry for future downturns, Bleckmann said. “The crisis made [air cargo] players more flexible,” he said. “Carriers learned how to move airplanes where they see growth.”
Of course, not everything is rainbows in the air cargo sector. For instance, Latin America, and Brazil in particular, have suffered a major economic downturns that have negatively affected cargo shipments, Bleckmann said. However, he said he is also seeing growth in the Mexican market as new companies establish manufacturing sites there.
There is also the troubling issue of depressed cargo yields that has yet to be addressed. “The leading indicators show that we are on very solid ground,” Steen said. “But is it sustainable? When you break down the 3 to 5 percent growth figures, you see that certain yields are down in some areas, while some are growing at a rapid pace.”
Brittin cautioned that a “perfect storm” may be brewing on the horizon in the form of electronic air waybill technical difficulties, conflicting customs requirements and meeting stricter security controls that call for getting information from forwarders earlier in the process. This may lead to a “tidal wave of data requirements” that may be overwhelming for many carriers, he added.
Brittin also said the air cargo industry needs to learn the buying habits of consumers and react to downturns quickly, the same way shippers have always done. One way to do this, he said, is to provide “visibility across all aspects of the supply chain and a willingness to share data.”
McWhorter suggested that carriers look more closely at the difference between the 30 to 45 days for a typical ocean-freight voyage to the average six-day turnaround for air cargo shipments. “That leaves a big gap in between,” he said. Rather than focus on shrinking the six-day supply chain, he advocated catering to those customers who “can’t pay express rates but need it faster than ocean freight can deliver.”