Air cargo picture brightens

According to IATA, Asia-Pacific carriers are expected to post a $5.2 billion profit.

<p>IATA is an international trade body, created over 60 years ago by a group of airlines. Today, IATA represents some 230 airlines comprising 93% of scheduled international air traffic.</p>

IATA is an international trade body, created over 60 years ago by a group of airlines. Today, IATA represents some 230 airlines comprising 93% of scheduled international air traffic.

Transportation in the News

STB reschedules listening session for CSX service issues
AAR reports mixed volumes for week ending September 16
Maersk makes bold bid at differentiation by teaming with CRM giant
Federal Maritime Commission to take closer look at “Fair Port Practices”
FTR’s Trucking Conditions Index sees increase from June to July
More Transportation News

Transportation Resource

Is your transportation running at digital speed?
Thursday, September 21, 2017 | 2pm ET
All Resources
By ·

The air cargo industry has made unexpected gains in recent months, but analysts are not predicting that the trend will continue into 2011.

The International Air Transport Association (IATA) revised its 2010 industry outlook and is now projecting a profit of $8.9 billion (up from the $2.5 billion forecast in June). In its first look into 2011, the Association estimates that profitability will drop to $5.3 billion.

“The industry recovery has been stronger and faster than anyone predicted,” said Giovanni Bisignani, IATA’s Director General and CEO in Geneva. “The $8.9 billion profit that we are projecting will start to recoup the nearly $50 billion lost over the previous decade.”

This observation was mirrored in comments made earlier this week at Oracle OpenWorld in San Francisco, where supply chain software developers said 2010 promises to be a better year for everyone in the global logistics industry.

In his address on key trends in logistics, James Taylor, vice president of software applications maker, CSC, noted that a rebound was in order.

The high-tech industry is heavily reliant on air cargo for premium distribution services, particularly on the Pacific Rim.

And according to IATA, Asia-Pacific carriers are expected to post a $5.2 billion profit.

This is better than the $3 billion recorded during the previous peak in 2007 and double the previously forecasted $2.2 billion. The strong improvement is based on strong market growth and yield gains.  Renewed buoyancy in air freight markets has been particularly important for airlines in this region, where it can represent up to 40 percent of revenues. The 23.5 percent improvement in high volume intra-Asia premium traffic reflects another significant trend.

“But a reality check is in order,” cautioned Bisignani. “There are lingering doubts about how long this cyclical upturn will last.  Even if it is sustainable, the profit margins that we operate on are so razor thin that even increasing profits 3.5 times only generates a 1.6 percent margin. This is below the 2.5 percent margin of the previous cycle peak in 2007 and far below what it would take just to cover our cost of capital.”

 


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
eBook: Why Multi-Tier Supplier Collaboration is More Important Now
Explore the benefits of supplier collaboration including sharing demand forecasts, faster reactions to demand or capacity changes and well-coordinated product launches.
Download Today!
From the September 2017 Logistics Management Magazine Issue
While Amazon’s recent bid to purchase Whole Foods made mainstream headlines, the e-commerce giant will still need to adhere to time-tested realities. Any way you slice it, the integrated U.S. cold chain requires optimized service from existing ports, 3PLs, cold storage warehousing, transportation providers and high-value vendors.
Improving 3PL Management: Glanbia Adds Muscle to Logistics
Why Retail Supply Chain Transformations Fail - and how to get it right
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
EDITORS' PICKS
26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed
While a majority of companies strongly agree that transportation is a strategically important...
34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...

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...