Subscribe to our free, weekly email newsletter!


FAA to examine health of air cargo industry

“To navigate the volatile operating environment, mainline carriers will continue to drive down their costs by better matching flight frequencies and/or aircraft gauge with demand,” said the authors of this year’s FAA Forecast.
By Patrick Burnson, Executive Editor
February 11, 2011

When the 36th Annual Federal Aviation Administration’s (FAA) Forecast Conference convenes in Washington next week, shippers should expect to hear that profitability for U.S. carriers will hinge a stable environment for fuel prices.

“To navigate the volatile operating environment, mainline carriers will continue to drive down their costs by better matching flight frequencies and/or aircraft gauge with demand,” said the authors of this year’s FAA Forecast.

Analysts also noted that airlines must delay deliveries of newer aircraft and/or ground older aircraft, while pressuring regional affiliates to accept lower fees for contract flying.

At the same time, the 2010-2030 forecast predicts that aviation will continue to grow over the long term, despite current global economic conditions.

The report begins by observing that since 2000, U.S. airlines have dealt with the impacts of 9/11, the bankruptcy of four network carriers, record high fuel prices, the most serious economic downturn since the Great Depression. Furthermore, there was the heightened concerns about a
pandemic that turned into reality in 2009.

The level of activity and demand in the long term, however, is not expected to snap back to levels published in the previous FAA forecast. The most significant factor preventing recovery to prior forecast levels is the blow to the economy from the Great Recession.
“The recession led to an erosion of wealth, double-digit unemployment, declining corporate travel budgets, and close-fisted consumers, all of which contributed to a softening of demand,” said analysts.

A bright spot is on the horizon, however, they said. After four straight quarters of decline, the U.S. economy resumed growth in the fourth quarter of 2009, albeit driven by government stimulus packages that are winding down.

Brian Clancy, managing director, Logistics Capital & Strategy, LLC, will be addressing next weeks’ forum on the “Cargo” panel. From his perspective, the “value density” of goods will determine whether a recovery is under way.

“Some goods must really be shipped by air,” he said in an interview, “but that might not mean a sustainable trend will get underway. Drill bits for the oil industry, for example, and aircraft spare parts will remain a part of this mix. But just-in-time delivery for a great many other commodities has tapered off.”

http://www.faa.gov/

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

Even as Congress was putting the finishing touches on a 10-month short-term funding extension to the federal aid highway bill that temporarily averts a funding crisis, Transportation Secretary Anthony Foxx was ripping the measure as a short-term “gimmick” that once again fails to adequately fund U.S. infrastructure needs in the long run.

ISI is comprised of Integrated Services, ISI Logistics and ISI Logistics South and is focused on the warehousing and transportation needs of automotive shippers. RRTS said that in 2013, Integrated Services generated revenues of approximately $21 million adding that Integrated Services is expected to be accretive to Roadrunner’s earnings in 2014.

The market for supply chain management software continues to expand, highlighting the importance of software in today’s supply chains.

Over the past five years emerging markets have maintained their “growth dynamic,” observes John Manners-Bell, CEO, of the London-based think tank Transport Intelligence (Ti).

Amid the talk and coverage about things negatively impacting the trucking industry like increasing regulations, tight capacity, and equipment-related issues and challenges, there is one thing to always remember about the sector: it moves a lot of freight, make that more than a lot, actually.

Article Topics

News · Air Cargo · Global Trade · Transportation · All topics

Comments

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


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA