Air Cargo: Energy is King

This observation will no doubt resonate with the global air cargo industry.
By Patrick Burnson, Executive Editor
July 19, 2011 - LM Editorial

As fellow blogger – Mike Regan – notes in a fine recent article by Jeff Berman, “there has never been a period of volatility in fuel prices like there has been in the last year.”

This observation will no doubt resonate with the global air cargo industry.

According to the International Air Transport Association (IATA), difficulties in the jet fuel supply chain are being exacerbated by the big oil companies:

“The likes of Shell and Exxon are no longer interested in building new refineries but rather are investing upstream in exploration activities,” noted IATA in a recent bulletin.

Since the beginning of 2010 Chevron has sold downstream assets in more than 20 countries. Recently it sold its UK downstream assets, including the 220,000 barrels-per-day Pembroke Refinery, now owned by Valero Energy. BP has no refining capacity in the United Kingdom while Total and Shell are also looking to sell their remaining refining assets.

New players, such as Vitol, Morgan Stanley, Puma Energy, Sol, Rubis and others are coming in but they sometimes lack the expertise necessary to keep jet fuel prices low.

IATA adds that airlines could end up paying for “a newcomer’s learning curve,” although some see this as welcome competition and a positive long-term trend.

But given that the industry fuel bill has gone from $40 billion a decade ago to $139 billion in 2010, this divestment at a time when biofuel development is vital presents the industry with a huge challenge. Concludes IATA: These challenges in traditional jet fuel push alternatives to the vanguard.



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

Lyon, France-based Norbert Dentressangle, a $5.5 billion global third-party logistics (3PL) services provider focused on global logistics, transport, ocean, and air services, said today it has acquired Des Moines, Iowa-based Jacobson Companies, a value-added warehousing (VAW) company, for $750 million from private equity firm Oak Hill Capital Partners.

Download the newly released research report, "Transportation Management Systems" conducted by Peerless Research Group (PRG) on behalf of Supply Chain Management Review and Logistics Management magazines. Learn what logistic experts are saying about their current supply chain technology infrastructures, how they tackle the transportation component, and revealed the gaps that still need to be filled in order to attain end to-end visibility of a streamlined supply chain.

From cost center to growth center. Get insightful opinions on changes in the marketplace from this independent survey of warehouse personnel. Motorola Solutions examined the current warehousing marketplace in our 2013 Warehouse Vision Report, conducted April-May of 2013.

Even though not all publicly-traded less-than-truckload carriers (LTL) have posted second quarter earnings yet, the early consensus for those that have issued results is looking very good.

The advance estimate for second quarter GDP at 4.0 percent could serve as a sign of a steadier and improving economy.

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers 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. Contact Patrick Burnson

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