Heavy-airfreight market lost altitude last year

By Staff -- Logistics Management, 5/1/2000

A recent airfreight market report shows that the U.S. heavy-airfreight industry suffered huge declines in shipments and revenues during the first half of 1999. The Colography Group Inc. of Atlanta, Ga., reported that heavy-airfreight traffic, which covers shipments weighing 71 pounds or more, fell by 9.3 percent from levels reported for the first half of 1998. That traffic totaled some 15.2 million shipments during the first half of 1999 compared with 16.8 million shipments during the same period in 1998.

"For years, the heavy-freight segment has been losing altitude in the U.S. air market," said Ted Scherck, president of the Colography Group, in announcing the study's results. "But these numbers paint an even darker picture going forward."

Although heavy airfreight suffered declines, other types of air shipments soared. For instance, package traffic-shipments weighing between 2 and 70 pounds-grew 3.6 percent compared with figures from the first half of 1998. Package traffic totaled approximately 1.041 billion shipments in the first half of 1999 vs. 1.004 billion shipments in the first half of 1998. Letter and envelope shipments (weighing less than two pounds) rose 4 percent, with 390 million shipments in the first six months of 1999 vs. 375 million shipments for the same period in 1998.

In general, revenue performance matched that of traffic volumes. Overall, airfreight revenue reached $15.67 billion in the first half of 1999, a 4.7-percent increase over the same period in 1998. Revenue for the heavy-airfreight segment, however, fell 6.2 percent to $2.45 billion in the first half of 1999, down from $2.61 billion in 1998's first half. By contrast, package revenue reached $8.9 billion in the first half of 1999 compared with $8.3 billion in 1998, an 8.1-percent increase. Letter and envelope revenue amounted to $4.2 billion in the first half of 1999 vs. $4 billion during the same time frame in 1999.

Scherck attributed the heavyweight air segment's declining fortunes to changes in supply chain management practices and the growth of e-business. "More than ever, shippers are focused on eliminating supply-demand imbalances and removing impediments between themselves and their customers," he noted. "More goods are being shipped directly to customers, being shipped more frequently, and being shipped in smaller increments. The traditional approach of aggregating shipments, transporting them in bulk to a warehouse, breaking the freight down, and distributing [goods] from there is fast becoming an anachronism."

Colography's research also found that the average weight of a heavy-airfreight shipment grew very slightly. Average package weight increased by 2.9 percent.

The report also showed that UPS's share of U.S. domestic air shipments-15.6 percent-remained below the 16.1-percent share it held in 1996. Colography noted that despite healthy shipment growth, UPS last year was still unable to achieve the share it held before the 1997 Teamsters strike against it.