Subscribe to our free, weekly email newsletter!



Air cargo sector challenged by nature and energy

By Patrick Burnson, Executive Editor
February 04, 2011

Despite the encouraging news from The International Air Transport Association (IATA) on improving freight volumes, there are still two key issues that may have a negative impact on a full recovery: the weather and fuel prices.

Severe weather in Europe and North America in December was a major problem, and the season so far does not appear to be improving. It is estimated that this shaved 1 percent off of total traffic demand for the month.

As a result demand dipped to 4.9 percent growth on December 2009 levels, significantly lower than the 8.2 percent growth recorded in November. Hardest hit was Europe which saw December growth slow to 3.3 percent.

But IATA says this is only half the story.

A sharp rise in oil prices, as they predicted, may mean a consecutive second year of profitability – but with industry profits falling by 40 percent to $9.1 billion.

This was based on an oil price of $84 per barrel (Brent). Fuel accounts for 27 percent of operating costs and a sustained rise in the oil price could spoil the party. With uncertainties in the Middle East, oil prices are now hovering near the $100 per barrel mark.

For every dollar increase in the average price of a barrel of oil over the year, airlines face the difficult task of recovering an additional $1.6 billion in costs.

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

Mexico's growing importance in the continental supply chain is now being recognized by North American transportation groups

Satish Jindel, president of Pittsburgh-based SJ Consulting, says that one way for LTL carriers to improve both their bottom lines and overall productivity is to get a better grasp on the cost of handling a shipment and the pricing they have for it.

Falling 5.5 cents to $2.668 per gallon, this follows last week’s 5.9 cent decline for the lowest weekly average price going back to the week of October 14, 2009, when it was at $2.60 per gallon.

With the latest round of Trans-Pacific Partnership (TPP) negotiations in Maui, Hawaii ending without a deal, U.S. supply managers may be adjusting to other global sourcing strategies.

The PMI, the ISM’s index to measure growth fell 0.8 percent to 52.7 (a PMI of 50 or greater represents growth). PMI growth has been at 50 or higher for 31 straight months (with the overall economy growing for 74 months), and the current PMI is 1.7 percent below the 12-month average of 54.4.

Article Topics

Blogs · Air Cargo · Transportation · All topics

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