Air Cargo: Energy is King

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

By ·

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

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 [email protected]

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!

Latest Whitepaper
Private Fleet vs. Dedicated: Which one is right for you?
Having the right fleet for your business can give you an advantage over the competition and lower transportation costs.
Download Today!
From the April 2017 Issue
While adoption rates have remained relatively flat, yard management systems (YMS) are helping logistics operations turn that important space between the loading dock and the gate into a vital link in the supply chain.
Information Management: Wearables come in for a refit
2017 Air Cargo Roundtable: Positive Outlook Driven by New Demand
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Maximize Your LTL Driver Adherence with Real-time Feedback
This webinar shows how companies are using real-time performance data to optimize the scheduling of their city fleets, as well as the routing of their standard, accelerated and time-critical shipments.
Register Today!
EDITORS' PICKS
2017 Salary Survey: Fresh Voices Express Optimism
Our “33rd Annual Salary Survey” reflects more diversity entering the logistics management...
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...

ASEAN Logistics: Building Collectively
While most of the world withdraws inward, Southeast Asia is practicing effective cooperation between...
2017 Rate Outlook: Will the pieces fall into place?
Trade and transport analysts see a turnaround in last year’s negative market outlook, but as...