Subscribe to our free, weekly email newsletter!



Air Cargo: Energy is King

This observation will no doubt resonate with the global air cargo industry.
By Patrick Burnson, Executive Editor
July 19, 2011

As fellow blogger – Mike Regan – notes in a fine recent article by Jeff Berman, “there has never been a period of volatility in fuel prices like there has been in the last year.”

This observation will no doubt resonate with the global air cargo industry.

According to the International Air Transport Association (IATA), difficulties in the jet fuel supply chain are being exacerbated by the big oil companies:

“The likes of Shell and Exxon are no longer interested in building new refineries but rather are investing upstream in exploration activities,” noted IATA in a recent bulletin.

Since the beginning of 2010 Chevron has sold downstream assets in more than 20 countries. Recently it sold its UK downstream assets, including the 220,000 barrels-per-day Pembroke Refinery, now owned by Valero Energy. BP has no refining capacity in the United Kingdom while Total and Shell are also looking to sell their remaining refining assets.

New players, such as Vitol, Morgan Stanley, Puma Energy, Sol, Rubis and others are coming in but they sometimes lack the expertise necessary to keep jet fuel prices low.

IATA adds that airlines could end up paying for “a newcomer’s learning curve,” although some see this as welcome competition and a positive long-term trend.

But given that the industry fuel bill has gone from $40 billion a decade ago to $139 billion in 2010, this divestment at a time when biofuel development is vital presents the industry with a huge challenge. Concludes IATA: These challenges in traditional jet fuel push alternatives to the vanguard.

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

While summer may be nearing its end, the climate in the manufacturing sector remains very warm, according to the most recent edition of the Manufacturing Report on Business issued today by the Institute for Supply Management.

When publicly-traded Class I freight railroad and intermodal service providers issued second quarter earnings results earlier this summer, the topic of less than ideal service on the rails was a common theme within the earnings releases and question and answer sessions with top management at those companies.

Supply chain security provider Freightwatch International has released its semi-annual report on cargo theft in the Asia Pacific region for the first half of 2014, which contains some heartening news for U.S. shippers reliant on trucking, warehousing and retail.

FedEx Ground, a subsidiary of FedEx Corporation, reports today that a decision by a three-judge panel of the United States Court of Appeals for the Ninth Circuit reversed previous rulings by the District Court for the Northern District of Indiana in three class action cases involving mostly former independent contractors for FedEx Ground

More talking remains before the deal is done

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA