Subscribe to our free, weekly email newsletter!


IATA issues positive statement on air cargo growth

The rising price of oil, and continued unrest in the Middle East remains a concern for U.S. air cargo executives, however
By Patrick Burnson, Executive Editor
March 01, 2011

The International Air Transport Association (IATA) announced international scheduled traffic results for January showing a 9.1 percent growth in air freight compared to January 2010.

“We begin the year with some good news. January traffic volumes are up—8.2 percent on January 2010 and 2.6 percent on December. With most major indices pointing to strengthening world trade and economic growth, this is positive for the industry’s prospects,” said Giovanni Bisignani, IATA’s Director General and CEO.

He added – predictably – that industry leaders are closely tracking events in the Middle East.

“The region’s instability has sent oil prices skyrocketing,” he said. “Our current forecast is based on an average annual oil price of $84 per barrel (Brent). Today the price is over $100. For each dollar it increases, the industry is challenged to recover $1.6 billion in additional costs. With $598 billion in revenues, $9.1 billion in profits and a profit margin of just 1.5 percent, even with good news on traffic 2011 is starting out as a very challenging year for airlines.”

This concern was shared by U.S. air cargo executives, who told LM that they are keeping a watchful eye on the situation.

“Fuel is our second largest expense behind salaries, wages, and benefits,” said Matt Buckley, Southwest Airline’s senior director, cargo and charters. “Rising fuel costs have a significant impact on our bottom line, and thus will ultimately result in increased shipping costs.”

Robbie Anderson, president, United Cargo, told LM that fuel is United’s largest expense at 26.6 percent and, as a result, is a constant focus for efficiency.

“The rising drumbeat of fuel prices created an increase of $517 million in United’s fuel costs in the fourth quarter alone,” he said. “Consider that each run up of 1 dollar in the price of crude carries a $100 million incremental cost to United. That is pretty startling.”

And according to IATA, the timing for such a complication is ill-timed. Air freight in January was 39 percent above the low point reached at the end of 2009 and some 6 percent above the pre-recession peak of early 2008. Freight has, however, fallen 2 percent since its May 2010 peak at the height of the re-stocking bubble.

For more stories on Air Cargo click here.

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

Earlier today, the United States Senate signed off on a six-year surface transportation authorization, according to various media reports. The bill, entitled the Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act, passed by a 65-34 margin and comes at a time, when the most recent extension for surface transportation funding expires tomorrow, July 31.

Demand for the $500 million in available funding for the United States Department of Transportation’s TIGER (Transportation Investment Generating Economic Recovery) competitive grant program was easily trumped, with applications for the seventh round of TIGER grants coming in at $9.8 billion, or nearly twenty times the available amount, DOT said this week.

Global logistics managers will be tracking the progress of the controversial Trans-Pacific Partnership (TPP) talks in Maui, Hawaii this week, as negotiating parties hope to finalize the agreement.

As has been noted in recent coverage on this site in regards to Peak Season, one underlying theme has been, and remains, how Peak Season is not what it used to be. That is not to say there will not be any Peak Season-related activity. Make no mistake, there will be and things driving it from the seasonal nature of business activity and cargo flows to higher demand and increased e-commerce activity, among others.

UPS Access Point locations serve as a replacement delivery address when consumers are not at home to receive a package or when consumers want a delivery to go somewhere other than their residence.

Article Topics

News · Air Cargo · Air Freight · 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