Subscribe to our free, weekly email newsletter!


Air cargo picture brightens

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

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.

By Patrick Burnson, Executive Editor
September 22, 2010

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

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

Transportation stakeholders reliant on North Carolina’s major seaports are welcoming news this week, which outlines plans to enhance the intermodal and cold chain network in the region.

The index ISM uses to measure non-manufacturing growth—known as the NMI—was 56.9 in February, which was 0.2 percent ahead of January and also 0.1 percent ahead of the 12-month average of 56.8. Economic activity in the non-manufacturing sector has grown for the last 61 months, according to ISM.

Non asset-based third-party logistics (3PL) services and logistics technology services provider Transplace said today that Brooks Bentz has joined the company in a newly-created role as president of Transplace Consulting in conjunction with the launch of the company’s new North American consulting services practice.

The advent of e-commerce continues to grow and gain increased traction over time. The many ways for consumers to order and purchase goods online continues to expand and leads to various subsequent byproducts of online purchases, including shopping through multiple channels, and delivery and payment options, among other things. These types of topics serve as the thesis in the second annual UPS Pulse of the Online Shopper Global Study issued this week by UPS and comScore Inc.

A major highlight of CEVA’s fourth quarter performance was its new business wins, which were up 14 percent for all of 2014, with Freight Management wins up 14 percent, and Ocean Freight and Air Freight wins up 30 percent and 14 percent, respectively, while Contract Logistics wins were up 2 percent.

Comments

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


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA