Air cargo forecast dips in first quarter

The bulk of respondents now expect the level of profitability to fall this year, driven largely by a significant increase in fuel costs.

By ·

Results from the International Air Transport Association’s (IATA) quarterly survey conducted in April point to a significant deterioration in sentiment on the outlook for industry profitability in 2011. The bulk of respondents now expect the level of profitability to fall this year, driven largely by a significant increase in fuel costs.

The extent of improvement in reported profitability also moderated during the first quarter of 2011. While 55 percent of respondents reported improved profitability during Q1 2011, almost a third reported poorer results. In March IATA revised down its forecast for 2011 industry profits to $8.6 billion, a fall of almost half from the estimated $16 billion profits achieved in 2010.

Richard Thompson, executive vice president, global supply chain practice for Jones Lang LaSalle in Chicago, told LM that this should come as no surprise.

“As one of four major modes of transport, air cargo is the most costly,” he said.

“Expectations about prospects for profitability over the year ahead fell significantly in our April survey, largely as a result of the sharp rise in jet fuel costs seen in the first quarter of 2011” said IATA spokesmen. “More than half of respondents now expect reduced profitability over the next 12 months. The extent of improvement in reported profitability also moderated significantly during the last quarter.”


The balance of respondents on the outlook for profitability over the year ahead fell below the 50 “no-change” mark – to 32.3 indicating reduced profitability – for the first time since mid-2009. Although traffic volumes are expect to grow further, more challenging demand-supply conditions – as capacity and competition increase on key routes – will tend to soften yield and revenue growth. At the same time input costs are expected to rise, driven primarily by rising fuel costs.

IATA said that these factors will put downward pressure on profits. It should be noted that that this does not necessarily mean a return to losses.

“It does look likely, however, that the industry in 2011 will see a fall from the level of profitability seen last year,” IATA spokesmen said.

For related articles click here.


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!

Article Topics

Air Cargo · Air Freight · World Trade · All Topics
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...