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Home Shipping & Logistics Air Freight

What’s Driving the Air Freight Industry Today?

December 8, 2016
What’s Driving the Air Freight Industry Today?
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Andreas P. Pohl, Senior Vice President and Head of Airfreight Americas, Schenker, Inc.

Last year in this space, I referenced research results published by SandlerResearch.org that predicted the worldwide air cargo logistics market will experience a 5.97% compounded annual growth rate from 2014 to 2019. Since we are nearing the middle of this period, let’s look at how things have changed and where industry growth stands in shipment volumes at this point in 2016.

The International Air Transport Association (IATA) released data for global air freight markets in August 2016 showing that demand rose 3.9% year-on-year. Freight capacity measured in available freight tonne kilometers (AFTKs) increased by 4.1% over the same period. Load factors remained historically low, keeping yields under pressure.

Carriers in all regions except Latin America reported an increase in year-on-year demand in August, however, regional results varied considerably.

North American carriers saw freight volumes expand 5.5% in August 2016 year-on-year, and capacity increase by 3.7%. International freight volumes grew by 4.6% in August—their fastest pace since the U.S. seaports disruption boosted demand earlier in 2015. However, seasonally adjusted activity has barely altered from 2008 levels. The strength of the U.S. dollar continues to keep the U.S. export market under pressure.

Latin American airlines saw demand contract in annual terms for the sixth consecutive month. FTKs in August 2016 fell by 3.3% compared to the same period last year and capacity decreased by 0.2%. The region continues to be blighted by weak economic and political conditions, particularly in Brazil.

Overall, the market is not exactly as strong as we would like it to be. At DB Schenker air freight divisions in the Americas, we have seen increases in the consumer electronics, health care, and pharmaceutical markets, with retail fashion holding steady year over year.

Even the transportation of perishable cargo, once an exclusive domain for the air cargo industry, continues to evolve in light of a changing regulatory environment and continued pressure to find a more cost-effective way to transport these goods while maintaining high quality. We have seen a mode shift from air to ocean for some products and are now watching trials, approved by the USDA and Customs and Border Protection (CBP) in which both modes of transportation are used to expedite perishable shipments from Latin America via Miami by ocean and from Miami via airfreight to APAC or EMEA.

That is a significant development since, prior to the cooperation with USDA and CBP to make these types of transit shipments possible, the cargo would have been shipped by air only.

Another development that we are watching closely is the 3D printer market for both consumers and large industrial customers. Here we have an example where these leading edge electronic machines are being manufactured in the U.S. and exported all over the world. High volume, valuable articles like these must also be transported securely and damage-free.

The 3D printer market is also having a small, but growing effect on the logistics industry as a whole. While it is not a concern today, 3D printers may alter supply chains around the world in coming years.

For example, one major aircraft manufacturer has more than 20,000 non-metallic 3D manufactured parts that are on airplanes now. When 3D printed parts need replacing, they don’t have to be brought from a warehouse; they can be replaced with 3D printed parts right on site.

The transportation industry continues to evolve and that makes this industry so exciting and, at times, challenging. We at DB Schenker are well prepared to deal with the opportunities and challenges, and continue to find solutions for our customers.

Source: www.inboundlogistics.com

 

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