Subscribe to our free, weekly email newsletter!


IATA’s air cargo forecast now less rosy

In its most recent report, IATA said profits will drop from $9.1 billion to $8.6 billion – a 46 percent reduction from the $16 billion of profit they estimated the industry generated last year.
By Patrick Burnson, Executive Editor
March 03, 2011

As widely anticipated, the International Air Transport Association (IATA) announced a cut in its forecast for airline industry profits (net post-tax) in 2011.

Spokesmen for the association had told LM that such a reduction was likely, although specific numbers would not be shared until this week. In its most recent report, IATA said profits will drop from $9.1 billion to $8.6 billion – a 46 percent reduction from the $16 billion of profit they estimated the industry generated last year.

“This downgrade is due to the recent surge in oil and jet kerosene prices. In line with market forecasts we now assume an average crude oil price of $96 a barrel this year, significantly up on our previous forecast of $84 a barrel, the report stated.

IATA said that the reduction in profitability would have been much greater were it not for upward revisions to economic growth this year together with relatively stable and high load factors:

“When economies are strong higher yields make it possible for airlines to limit the profitability damage from high oil prices. Clearly the risk to this outlook is that should economies weaken, under pressure from commodity prices and debt, airline profits could weaken much faster than we portray here.”

One bright spot in all of this, however, continues to be on the Pacific rim. January freight carried by Asia-Pacific carriers showed a 6.4 percent year-on-year increase. While this growth is slightly lower than the 7.2 percent reported for December 2010, the volume of freight carried by airlines based in the region actually increased by 2 percent during January alone. The growth in January takes the volume of air freight carried to 6 percent above the pre-recession peak level and 48 percent higher than the recession trough.


Matt Buckley, senior director, cargo and charters for Southwest Airlines, told LM that this came as no surprise:

“Considering the tremendous amount of manufacturing being done throughout parts of Asia, and the volume of those goods being imported to the U.S., Asia will continue to be a strategic focus for many of our shippers for years to come.”

For more stories on Air Freight 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

Flags of Convenience are a fact of life in the commercial maritime trade, but several European political action groups are worried that they will pose a threat to the Continent’s air cargo industry.

For May, which is the most recent month for which data is available, the SCI is -7.5, following April’s -7.5. FTR said this reading represents a still-tight capacity environment, as utilization rates hover between 98 percent and 99 percent.

With a 1.1 cent drop to $3.858 per gallon, this follows declines of 2.5 cents, 1.9 cents, and 0.7 cents over the previous three weeks, with the cumulative four-week decline at 6.2 cents.

Second quarter revenue for transportation and logistics titan UPS headed up 5.6 percent annually at $14.3 billion, while operating profit sank 57.1 percent to $747 million. Quarterly net income fell 57.6 percent to $454 million.

Panjiva, an online search engine with detailed information on global suppliers and manufacturers, recently said it is opening up the “vault,” so to speak. The vault in this case is making its copious amount of trade data accessible through an Application Programming Interface (API), which enables customers to extract Panjiva’s trade data into their own database.

Article Topics

News · Air Freight · Air Cargo · 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