2014 State of Logistics: Air’s slight improvement despite headwinds

By Patrick Burnson, Executive Editor
July 01, 2014 - LM Editorial

As noted in the 25th Annual State of Logistics report, the airfreight industry has been facing chronic overcapacity and deteriorating yields. New details surfacing in similar new research mirror these findings.

Even though the overall airfreight logistics index has improved 4.4 points from June 2013, the June 2014 data contained in the Stifel Logistics Confidence Index suggests that the airfreight market still remains fragile, declining 1.9 points to 53.8. The present situation remained the same in May, with Europe to the U.S. the only lane to decline, down 2.0 points to 49.7.

The latest figures from the International Air Transport Association (IATA) for April indicate that while the freight market improved 3.2 percent above previous year levels, demand has not. Traffic levels in April were slightly below those of January and 1.1 percent lower than what was recorded in March.

IATA indicated that European airlines saw demand for air cargo fall by 0.7 percent compared to April 2013, marking a slower start for carriers as they entered second quarter—particularly as GDP growth in the Eurozone was just 0.2 percent in the first quarter.

However, a slightly different and more encouraging story for airfreight seems to be playing out in Asia, where preliminary traffic figures for the month of April showed some growth in international air cargo markets.

According to the Association of Asia Pacific Airlines (AAPA), international air cargo demand in freight ton kilometers (FTK) increased for regional carriers by 4.7 percent in April, on the back of sustained demand for Asian exports. However, freight load factors remained under pressure due to capacity expansion.

With offered freight capacity expanding by 5.3 percent, the international freight load factor averaged 64.3 percent in April, 0.4 percentage points lower than the same month last year.

“International passenger traffic demand continued to grow, with the region’s carriers registering a 5.2 percent increase in international passenger numbers during the first four months of the year,” says Andrew Herdman, AAPA director general. “This was on the back of an improvement in business and consumer sentiment in most economies worldwide.

During the same period, air cargo demand for the region’s carriers grew by 4.2 percent, thanks to an improvement in global trade conditions.”

Analyst Rosalyn Wilson makes a similar observation in her report, noting that passenger jets are carrying growing volumes of cargo in their bellies, taking market share from cargo freighters.

All cargo airlines carry more than 79 percent of revenue ton-miles of freight and commercial passenger carries account for the rest. The amount being carried by passenger jets has been increasing especially because there’s more room in the bellies of these aircraft with the proliferation of baggage charges. According to Wilson, belly cargo in passenger planes is very profitable, estimated at close to 65 percent, so passenger airlines have been pursuing it more aggressively.



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

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement (NAFTA) partners Canada and Mexico increased 4.4 percent from August 2013 to August 2014 at $100.6 billion.

As expected, global trade dipped from August to September but still saw annual gains, according to data issued this week by Panjiva, an online search engine with detailed information on global suppliers and manufacturers.

Transportation and logistics merger and acquisition (M&A) activity in the third quarter saw annual gains, which were driven by smaller deals in the trucking logistics, shipping, and passenger air sectors, according to data issued in the Intersections report by PwC this week.

With the holidays rapidly approaching, it appears retailers are not quite done getting inventory set up and on the shelves in time for what is expected to be a fairly active shopping season. That much was evident based on recent data for September volumes issued by the Port of Los Angeles (POLA) and the Port of Long Beach (POLB).

Join Industry Expert Adrian Gonzalez for this educational webinar on the tenets and the benefits of Closed-Loop Operational Management. You’ll learn how Closed-Loop Operational Management optimizes orders, inventory, and transportation concurrently, and how it is able to optimize large-scale problems on a daily basis.

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