Up or down? Sector split on future of air cargo

Industry leaders are split on the future direction of modal shift between ocean and air freight.

Air saw an upturn in market share in the last quarter of 2009, but Iata chief economist Brian Pearce told delegates at the association’s World Cargo Symposium in Vancouver that the recent market share gains by air freight were unlikely to last.

“Air freight benefited from the inventory cycle, but I think it’s a temporary phenomenon. The structural loss of market share will continue,” he said.

Scott Dolan, head of cargo at United Airlines, believed cutting costs was the key to maintaining customers.

He said: “Electronics companies are seeing if they can move to ocean freight, so we need to reduce costs.

“A large percentage of their costs is now transport, and we are not finding ways to reduce that in the way that other parts of the supply chain are. We need to be doing that.”

However, Bill Flynn, CEO and president of Atlas Air Worldwide, said he saw no evidence of a shift to ocean freight.

“There is a resilient air freight core that is modally insensitive,” he said. “It might be economically sensitive, but it’s not modally so.”

But David Hoppin, managing partner of consultancy Merge Global, believed air freight had lost some of its market.

He said: “The value per kilo of air freight traffic is going up, which means some business is lost – and I don’t think it’s coming back.”

According to an industry survey carried out by Iata and consultancy Oliver Wyman, the electronics industry had reduced its importance to the air cargo sector, and was now given status equal to general cargo by CEOs. (source IFW)

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